US Tariff Changes: What You Need to Know

The Supreme Court has ruled that the IEEPA does not authorise the President to impose tariffs. As a result, such IEEPA tariffs can no longer be lawfully collected. However, a new 10% tariff (expected to rise to 15%) has been introduced under Section 122 of the Trade Act 1974, effective from 24 February for 150 days. Certain goods are exempt (see list) and services are not affected. Other options for introducing tariffs over time potentially exist under certain other US laws.

Fred Fischer, Senior Vice President, American Global Strategies

Leo Ayala, Vice President, American Global Strategies

Vivek Ramachandran, Head of Global Trade Solutions, HSBC

The tariff landscape remains very uncertain, as does clarity on refunds for tariffs paid under IEEPA

• The new tariffs can be stacked on top of existing duties (that are not IEEPA tariffs), making the total cost of importing goods higher and more unpredictable. Sectors like metals, semiconductors, and pharmaceuticals are especially impacted.
• The additional tariffs could potentially be breaching Most Favoured Nation (MFN) commitments in some trade deals.
• The process for tariff refunds can be slow and may require court action. The current legal environment is fluid, with tariff refund processes unclear and subject potentially to lengthy court proceedings.

Trade relationships are shifting and the focus on Free Trade Agreements is likely to continue

• The EU has overtaken China as the largest source of the US trade deficit. In recent years, imports from the EU have increased, while imports from China have dropped sharply. This shift could drive new policy focus and potential trade tensions with the EU.
• Comprehensive trade agreements can take years to negotiate; current deals are mostly frameworks or contain exemptions.
• The USMCA (US-Mexico-Canada Agreement) is under review, with possible renegotiation or renewal decisions expected soon. Goods meeting USMCA rules of origin remain tariff-free currently.

How businesses can stay informed and take proactive steps

• Follow the USCBP administrative process for refunds, getting specialist support where required.
• Review Supply Chains: Assess exposure to tariffs (including under Section 122 of the Trade Act 1974 and Section 232 of the Trade Expansion Act 1962), especially for goods sourced from the EU, Mexico, and China.
• Engage in Scenario Planning: Prepare for possible increases in tariffs and consider the potential impact of stacked tariffs on cost structures.
• Stay Informed on USMCA: Track developments in USMCA negotiations, especially if your business relies on North American trade flows.

Watch the full webinar replay video to find out more. We hope you find this insightful and valuable for your strategic planning. Please reach out to your HSBC representative if you would like to follow up or sign up to the next one.