Section 122 Tariffs replace IEEPA after Supreme Court

The Supreme Court’s decision addressing tariffs imposed under the International Emergency Economic Powers Act (IEEPA) has not ended the current tariff regime. Instead, most duties remain in place after the administration re-grounded them in Section 122 of U.S. trade law, a balance-of-payments authority. For businesses and consumers, the immediate story is a legal shift rather than a rate cut.

The change creates two parallel questions: whether prior IEEPA duties are refundable and how the new Section 122 tariffs will operate going forward. Importers are evaluating eligibility and documentation, while households will feel any price effects through retail pass-through rather than direct rebates. The European Union and other allies are also watching for diplomatic and commercial fallout.

Supreme Court decision on IEEPA: Section 122 keeps tariffs

According to the Financial Times’ Economics Show transcript with Michael Froman (https://www.ft.com/content/aa290e53-3057-467f-8870-d4e5b3a8b172), the Supreme Court of the United States invalidated certain tariff actions taken under IEEPA, prompting an immediate pivot to Section 122 “balance of payments” tariffs. That maneuver keeps collection mechanisms running while shifting the legal justification. It also signals that executive trade tools will continue to anchor U.S. tariff policy.

Under this structure, agencies can continue assessing duties at the border even as the legal footing changes. The Court’s ruling reshapes litigation risk and compliance procedures, but it does not, by itself, zero out bills due on current entries. Allies, including the European Union, are assessing what the decision means for previously negotiated understandings.

IEEPA tariffs refund: eligibility, scope, and how claims proceed

The refund question centers on what happens to roughly $130 billion collected under IEEPA before the Court’s ruling. In his analysis, the former U.S. trade chief has stressed that when duties are collected under an invalid authority, remedies typically flow to importers rather than end-consumers. “should be refunded to the importers,” said Michael Froman, former U.S. Trade Representative and now President of the Council on Foreign Relations.

How claims proceed will likely turn on each entry’s status. If deposits are unliquidated, administrative paths may be available; if liquidated, importers could face petitions or litigation. Customs lawyers will be central in sorting documentation and timelines, and outcomes may differ across products and periods.

Consumers who paid higher shelf prices are unlikely to receive direct refunds because remedies generally attach to import transactions rather than retail purchases. If refunds become likely or cash returns arrive, some companies may ease future pass-through, though price adjustments vary by sector and inventory position. He also expects persistent policy uncertainty as the administration leans on Section 301 and Section 232 authorities alongside Section 122.

Section 122 tariffs: authority, limits, duration, and business planning

Section 122 tariffs rest on a balance-of-payments rationale: the executive asserts that imports threaten external accounts and, on that basis, imposes temporary duties. That framework narrows the legal theory compared with IEEPA and may limit the policy to conditions tied to external imbalances. In practice, businesses should expect formal notices and adjustments as agencies align procedures to the new authority.

Duration is uncertain and will likely depend on whether the balance-of-payments justification is maintained and defended in court. Corporate planning therefore tends to favor scenario ranges over single-point expectations, with contract terms and sourcing plans structured to absorb changes. The backdrop includes potential investigations under Section 301 and actions under Section 232, which could amplify or offset Section 122 measures.

On diplomacy, allies are recalibrating. As reported by Yahoo Finance (https://finance.yahoo.com/news/europe-puts-us-trade-deal-182419502.html), Europe accepted a fragile tariff truce for stability, and the Court’s ruling disrupted the legal logic underpinning that deal; for now, the European Union appears more inclined to seek negotiation and exemptions than immediate retaliation.

Price and inflation impacts for consumers and importers

Price effects will flow through supply chains before reaching consumers, and timing varies by contracts, inventories, and competitive dynamics. Because the IEEPA tariffs refund process, if realized, operates at the importer level, households should not expect direct rebates. Near-term inflation impacts will hinge on how quickly refunds, exemptions, or redesignations change effective duty burdens.

Based on reporting by International Trade Today (https://www.internationaltradetoday.com/article/2025/09/12/former-ustr-during-obama-era-says-global-rulesbased-trade-gone-forever-2509120054), effective tariff rates have risen from about 2.5% pre-2016 to nearly 16% in recent years, and the average household burden has been estimated at roughly $2,400 annually. Those figures frame the potential magnitude of pass-through when tariffs rise or recede, though actual outcomes differ by product and channel.

At the time of this writing, based on data from Nasdaq, Apple Inc. shares traded around $266.33 as of 12:01:50 pm GMT-5 with the market open and data reported as delayed. While a single stock does not dictate tariff pass-through, it provides neutral context for broader market conditions as companies absorb policy shifts.