Commentary by William Alan Reinsch

Published March 2, 2026

Well, if you thought the great tariff debate was over after the Supreme Court's decision on February 20, you were wrong. The debate has only just begun, as the decision and the administration's subsequent actions have created new uncertainties and, as always, new opportunities for litigation. The following are some of the issues that have come up (there will be more), and their current status.

First, where are we? The new tariffs imposed pursuant to Section 122 of the Trade Act of 1974 are officially 10 percent, although the administration has said they will be increased to 15 percent. The delay is allegedly due to preparing the necessary paperwork, although it is hard to see how changing "10" to "15" in the proclamation would take very long.

One possibility is that the trade experts in the administration wanted to stick with 10 percent because that would not complicate the agreements with the United Kingdom, Australia, Singapore, and several Latin American countries, which provide for 10 percent tariffs. Raising the number to 15 percent would violate those agreements and irritate some of the United States' friends and allies. In addition, "stacking" a 15 percent tariff on top of existing most-favored-nation tariffs would raise tariffs beyond the level the European Union and perhaps other countries have agreed to. So, if the administration ultimately implements a 15 percent tariff, it will face a chorus of complaints from countries that will be worse off than they were before the court's ruling.

Another problem is likely litigation over the president's action. Section 122 refers to a balance of payments (BOP) crisis, not a balance of trade crisis. BOP refers to the total money coming into the country compared to the total money leaving the country. It is much broader than the trade deficit, and a BOP crisis usually refers to a country not having sufficient reserves to pay its debts. Most economists are saying the United States is not currently in a crisis, so the application of tariffs is misplaced.

Closely following on the heels of the economists come the lawyers smelling lawsuits. I had originally dismissed litigation because the tariffs can only last 150 days, and lawsuits would take longer than that. However, if companies want a refund from these new tariffs, they need to establish that the tariffs were illegal, which requires a return to court.

Speaking of refunds, the picture remains murky. Past court cases, particularly the one involving harbor maintenance fees, which were invalidated by the Supreme Court, show that companies are entitled to refunds with interest if tariffs are ruled illegal. The uncertainty is whether the government will do that automatically, or whether it will require companies to file protests-and ultimately lawsuits-to get their money back. There are established procedures for obtaining refunds of duties; only the scale is different in this case. All signs so far are that the administration intends to make the process difficult. The last word on that will fall to the Court of International Trade, which is tasked with determining what procedure should be followed. That will take time, so companies will have to be patient. There are already well over 1,000 lawsuits pending, and with some 300,000 entities having paid the tariffs, more are coming.

It appears less likely that consumers, as opposed to importers, will ever see any of the money. FedEx announced it would refund its tariffs to its consumers, but it remains to be seen whether anyone else will follow its lead.

There are rumors that the administration may try to avoid refunds by offering importers credits against future tariffs instead. That might be attractive to companies anticipating large tariff bills in the future, but that will not work for many companies.

What comes next? Pretty clearly, it will be a boatload of Section 232 and Section 301 investigations. There are pros and cons to each. Section 232 investigations are sector-specific. That means a lot of investigations, but they would likely withstand judicial scrutiny because judges will be reluctant to second-guess the president on a national security determination. Section 301 investigations are country-specific with remedies tailored to each case, which would give the president more flexibility, but they are also subject to the Administrative Procedures Act, which requires a lot of process-public hearings and opportunities for comment-that the administration has a history of ignoring. I expect Trump to use both tools, but Section 301 will predominate despite the risk of losing in court over process fouls.

Finally, we are only beginning to learn how foreign countries are reacting. Their first challenge has been to decide whether they are better or worse off. Countries with lower tariffs, like the United Kingdom, might find them increasing. Those with higher tariffs may find 10 or 15 percent an improvement. Part of that depends on how the tariffs are "stacked"-added on top of existing tariffs as explained above. In addition, countries that have formally signed agreements may be in a worse position than those that have not. The administration has said it considers those agreements to be in effect, and it expects the other countries to honor their obligations. That means those with higher tariffs may be stuck with them. Countries that have not signed an agreement may have more options, and those that have signed but not completed their domestic ratification procedures have an opportunity to slow-roll implementation to give them more time to decide what to do, as the European Union is doing. Most of them will proceed cautiously so as not to invite retaliation from Trump, but they must be thinking that they made concessions under the threat of tariffs that are now invalidated, so they have a good reason to revoke them.

The bottom line is that uncertainty rules. Countries, importers, CEOs, and investors will all move slowly, which means, among other things, that Trump's goal of reshoring manufacturing is moving farther away, and companies adjust their supply chains at their peril.

William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair at the Center for Strategic and International Studies in Washington, D.C.

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