Who Benefits the Most in the Post-IEEPA Tariff Landscape?

Following the U.S. Supreme Court ruling against the Trump administration’s International Emergency Economic Powers Act (IEEPA) tariffs, President Trump signed an executive order invoking Section 122 of the Trade Act of 1974 to impose a 10% global tariff, effective February 24. The Trump administration has suggested an increased global tariff of 15%—the highest possible rate for Section 122 tariffs—but as of the posting of this blog, the 10% rate remains unchanged.

For importers, the shift from a patchwork of country-specific IEEPA rates, capped rates, and other complex duty structures to a flat global tariff has significantly reshuffled competitive positions. And for nations around the world, the ruling has thrown painstakingly negotiated agreements into question.

The Elimination of IEEPA Tariffs: Impacts on Tariff Exposure

The end of IEEPA tariffs might suggest universal relief for importers. For some, however, the math has actually gotten worse.

Under the IEEPA tariff regime, the Trump administration had negotiated bilateral deals that capped tariff rates for many allied nations. The EU and the U.S. reached the Turnberry agreement last July, setting a 15% reciprocal tariff ceiling on most European goods: imports with a most-favored-nation (MFN) rate of less than 15% were subject to a reciprocal tariff of 15% minus the MFN rate, making for a total combined tariff rate of 15%. Meanwhile, imports with an MFN rate greater than 15% were subject to a 0% reciprocal tariff.

Japan also secured a 15% baseline rate as part of a deal that included a commitment to investing $550 billion in the United States. South Korea, the U.K., and Australia had negotiated similar terms.

Those cap rates are now gone. Because the Section 122 tariff applies on top of existing MFN duties, many goods from U.S. trading partners now face an effective tariff rate that exceeds what they were paying under IEEPA trade deals. According to the Global Trade Alert, the U.K., the EU, Japan, and South Korea all face trade-weighted tariff increases under the new regime. Japan's trade-weighted average rate rose by approximately 0.4%, for example, while South Korea’s increased by 0.6%. Singapore, which actually runs a trade deficit with the U.S., saw its effective rate climb by 1.1%.

Meanwhile, the nations that faced the highest IEEPA duties have seen the greatest relief. China, which had been subject to both “fentanyl” and reciprocal duty rates under IEEPA, experienced a net reduction in its effective tariff rate. Goldman Sachs estimated the ruling implies roughly a 5% decline in U.S. tariffs on Chinese goods, while Morgan Stanley calculated that weighted average tariffs on Chinese imports fell from approximately 32% to 24%. Brazil and India have similarly emerged as relative beneficiaries: last July, the U.S. imposed a standalone IEEPA order on Brazil that increased tariffs on the nation’s goods by an additional 40%. Meanwhile, the U.S. had imposed, and later eliminated, a 25% oil-related tariff on India that brought the country’s total tariff rate to 50%.

How Trading Partners Have Responded

The uneven impact of the Supreme Court ruling has produced strikingly different responses across the world’s major trading blocs.

European Union: The European Parliament immediately halted the ratification of the Turnberry trade deal. Bernd Lange, Chair of the European Parliament’s Committee on International Trade, indicated that the situation was "more uncertain than ever" and that the legal instrument underpinning the deal was "no longer available." Insisting that the U.S. honor the commitments it made last summer, EU lawmakers signaled they were prepared to deploy retaliatory measures if necessary.

Prior to the Supreme Court ruling against IEEPA tariffs, the EU Parliament had been planning for a potential vote on its U.S. trade deal on February 24. While the cap rate structure took effect last summer, many aspects of the deal had remained under EU legislative review and undergone proposed modifications by EU lawmakers.

China: China’s Ministry of Commerce indicated that it would conduct a “full assessment” of the ruling. China also urged the U.S. to remove unilateral tariffs on its trading partners, referring to President Trump’s 10% Section 122 tariff.

India: An Indian trade delegation postponed planned travel to Washington to review the implications of the new tariff structure. Trade Minister Piyush Goyal said India would resume discussions upon gaining greater clarity on the U.S. position.

Japan: Japanese officials told reporters that the ruling would not affect Japan's first round of investment projects in the U.S.

Malaysia and Indonesia: Officials from both countries noted that they had not yet ratified their recent trade deals with the U.S. These agreements had included major investment pledges.

Other Potential Duties on the Horizon

On March 11 and March 12, the U.S. Trade Representative (USTR) announced that it had initiated Section 301 investigations into a total of 60 U.S. trading partners, including China, the EU, and Mexico. These investigations will focus on “economies that appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses,” as well as nations that may produce goods with forced labor. Upon the completion of these investigations, President Trump may impose new long-term duties.

While Section 301 probes have historically ranged between 6 and 18 months, these investigations may proceed faster. With the U.S.’s current Section 122 tariff due to expire on July 24, 2026, the Trump administration may look to move faster in laying the groundwork for new potential long-term duties.

President Trump had also indicated after the Supreme Court ruling that he would launch new Section 232 investigations, which could also lead to new long-term tariffs. There are currently nine Section 232 investigations that are already open.

What The New Tariff Landscape Means for Importers

• First, tariff exposure has shifted. If you were sourcing from countries that had negotiated favorable IEEPA rates, your landed costs may have increased in the wake of the ruling. Conversely, goods from China, India, and Brazil may now face lower duties than they did a month ago. Importers should reassess their supply chain cost structures accordingly.
  • The Flexport Tariff Simulator can help businesses stay on top of their evolving landed costs, applicable tariffs, and complex trade rules.
• Second, importers are eligible for significant refund opportunities. On March 4, the Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to provide universal IEEPA duty refunds. While CBP works to ready a new automatic refund system in the Automated Commercial Environment (ACE), which could launch as soon as next month, importers should take action as soon as possible.
  • Confirm ACE access and set up ACH refunds by following these instructions.
  • Calculate the total refund amount you’re owed with the Flexport Tariff Refund Calculator.
  • Check your entries for errors, and note refund implications for goods subject to Section 232 duties. Flexport’s Audit Your Customs Broker can automatically audit your entries, identify tariff stacking issues, and estimate duties you may have overpaid.
  • File protests with CBP. Liquidations become “final” 180 days after the liquidation date, unless a protest is filed before that date. Flexport’s Trade Advisory group can assist customers with filing protests.

For importers navigating the aftermath of IEEPA duties, the landscape may only grow increasingly complex with time. Talk to a Flexport expert for specific guidance.