Tariff Chaos Continues: US To Stop Collecting Illegal Duties From Tomorrow, But What Happens To Trump's New 15% Tariff?

The US Customs and Border Protection agency said it will halt collections of tariffs imposed under the International Emergency Economic Powers Act at 12:01 a.m. EST (0501 GMT) on Tuesday, more than three days after the US Supreme Court declared the duties illegal.

The agency said in a message to shippers on its Cargo Systems Messaging Service (CSMS) that it will de-activate all tariff codes associated with President Donald Trump's prior IEEPA-related orders as of Tuesday. The IEEPA tariff collection halt coincides with Trump's imposition of a new, 15 per cent global tariff under a different legal authority to replace the ones struck down by the Supreme Court on Friday.

Bizarre situation after supreme court tariff verdict

CBP gave no reason why it was continuing to collect the tariffs at ports of entry days after the Supreme Court's ruling, and its message offered no information about possible refunds for importers. The message noted that the collection halt does not affect any other tariffs imposed by Trump, including those under the Section 232 national security statute and the Section 301 unfair trade practices statute. "CBP will provide additional guidance to the trade community through CSMS messages as appropriate," the agency said.

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Reuters reported on Friday that the Supreme Court decision made more than USD 175 billion in US Treasury revenue generated by the IEEPA tariffs subject to potential refunds, based on an estimate by Penn-Wharton Budget Model economists. Their estimate from a ground-up forecasting model showed that IEEPA-based tariffs were generating more than USD 500 million per day in gross revenue.

Tariff confusion among traders continues

However, there is a constant confusion among the traders across the globe. As they are struggling to digest what the US Supreme Court had decided in a landmark ruling, Trump's Sunday announcement of imposing 15 per cent tariffs, marked a new confusion among the trading community. They are still not have clear sense of Trump's next move, given that his unpredictable nature and egoist actions against the countries.

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What happens to Trump’s 15 per cent tariff announcement?

However, this does not end Trump's tariff agenda. In direct response to the ruling, Trump signed an executive order on Friday imposing a new temporary global tariff of initially 10 per cent, which was later raised by him on Saturday to the maximum 15 per cent allowed, under a different law: Section 122 of the Trade Act of 1974. This new tariff is set to take effect on the same day, Tuesday, February 24, and addresses "fundamental international payments problems." It's limited to 150 days unless Congress extends it, and it includes some exemptions such as certain foods, critical minerals, and goods already under other tariffs.

It means the US stops collecting the old, court-struck-down tariffs on Tuesday, but a new 15 per cent global tariff kicks in on the same day to replace much of the lost coverage. This is Trump's workaround to keep pushing his trade policy forward despite the Supreme Court setback.

(With inputs from Reuters)