GIFT AND HOME RETAILER NEWS
A Service of GiftsWholesale.Com & OmegaNet Inc.

Court Rules Against US Administration on Tariffs

Supreme Court May Take Case by October

A federal appeals court ruled on Friday, Aug. 29, that most of the Trump administration's tariffs could not be based on the International Emergency Economic Powers Act (IEEPA). The court set a deadline of October 14 for the tariffs to be recinded (source).

Photo by Markus Winkler

The president said his administration will appeal to the Supreme Court, urging swift action to keep the tariffs in place beyond the deadline. The Supreme Court begins its new session on the first Monday in October, which is October 1st, so action would be required immediately. It is possible the Supreme Court could refuse to hear the appeal, which would cause the appeals court ruling to stand and the tariffs would have to be reversed.

“It’s a very important decision, and frankly, if they make the wrong decision, it would be a devastation for our country,” Trump said.

The ruling comes after the Trump administration had negotiated new agreements with numerous countries and applied an across-the-board 10% tariff on countries which had not negotiated beginning August 1, except for countries with the largest exports to the US, which received higher tariffs.

Fallout?

If the appeals court ruling stands, wholesalers and retailers would receive short-term relief, since prices of imported goods would probably go back to what they were before the tariffs were applied. However, existing agreements with many countries could be negated and it's unclear what the result would be.

But some merchants are demanding refunds if the administration's tariff policy is reversed and no one knows at this point how that would work. Would refunds only be available to the plaintiffs in the original lawsuit? Would other merchants be required to apply for refunds? It is estimated that refunds could cost the treasury as much as $200 billion. That would be good for merchants, but could be bad for the nation's economy long term.

As a result of tariff income, the government has to borrow less money than it would have otherwise. Reversing the tariffs will mean increasing the national debt. That means selling Treasury bonds, which could push borrowing costs higher across the board, slowing growth in sectors like retail and housing.

Refunds could also spark concerns of runaway inflation, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told CNN. “During the Biden administration, huge budget deficits plus loose monetary policies unleashed the inflation genie,” he said.

If the administration's tariffs are ultimately reversed, the nation will again be saddled with unfair trade relations in which other countries levy high tariffs on the US and the US has low or no tariffs on those countries resulting in the trade imbalances President Trump's tariffs were designed to correct. Also, American workers will continue to lose jobs to workers overseas, which is also a loser for the nation's economy.