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Retail industry experts shared a brief sigh of relief when The Supreme Court on Friday ruled against President Donald Trump’s levies imposed under the International Emergency Economic Powers Act.
That was tempered with the awareness that tariff refunds would be a complex process and that the administration was likely to implement new levies under updated legal reasoning.
“For retail brands that rely on global sourcing, today’s ruling restored a measure of predictability and reinforces that sweeping trade changes require clearer statutory grounding,” Mark Burstein, senior vice president of the Americas at Inspectorio and a member of the American Apparel and Footwear Association board of directors, said in emailed commentary Friday. “However, the tariff risk does not disappear. It means future tariffs are more likely to be capped or targeted, procedurally structured, time-bound or subject to review, and more legally contestable.”
Hours after the court’s ruling Friday, Trump signed a proclamation to impose a 10% surcharge on imports entering the U.S. under Section 122 that will become effective Tuesday and will remain in place until July 24 unless extended by an act of Congress.
The statute allows the president to impose a levy up to 15% for 150 days, which Trump on Saturday said he planned to do. Swift reaction from trade partners, including the European Union, adds an additional layer of uncertainty.
The overall average effective tariff rate before the IEEPA tariffs were struck down was 16%, according to an updated analysis Saturday from The Budget Lab at Yale University. That rate fell to 9.1% after the IEEPA ruling from The Supreme Court, but rises to 13.7% with the Section 122 tariffs imposed at a 15% rate.
Still, some sectors of the retail industry could benefit.
“While reactions to [Friday’s] IEEPA ruling were mixed, we see net positives across hardlines (even w/ a new 15% global tariff),” Wells Fargo analysts said in an emailed note Monday.
Furniture retailers — who have been particularly impacted by evolving U.S. trade policy in the last year — are provided some relief under the IEEPA ruling, the Wells Fargo analysts added. Unknowns remain about the timing of potential refunds based on the IEEPA decisions, however.
“The refund question remains uncertain, but any reimbursement represents upside,” Coresight Research’s John Mercer, head of global research and managing director of data-driven research, said in a Friday report. “There is limited clarity on whether retailers will receive refunds tied to the ruling, and if so, on what timeline.”
The refunds are hardly a guarantee. The Supreme Court’s ruling doesn’t explicitly order any immediate refunds, though it opens the door for importers to submit refund claims, per a Friday analysis by the Penn Wharton Budget Model.
Profits could also come to fruition for companies once they clear through current inventory, but the new Section 122 tariffs could limit those gains, Telsey Advisory Group analysts said in a Monday note.
“Refunds are unlikely in the near term as they are likely to be held up in litigation,” Telsey Advisory Group analysts said. “Categories most negatively impacted by tariffs include furniture, footwear, and hard goods (e.g., sporting goods and toys). These categories should be among the biggest beneficiaries from the elimination or reduction of tariffs.”