Dave Townsend

My colleagues published an excellent eUpdate on a number of trade developments this week. It's been a lot, with USTR coming out with a slate of new 301 Tariffs following its investigation into forced labor related policies and practices, opening a new 301 investigation on intellectual property protection in Vietnam, adjustments to 232 duties and more. Here is a link to the eUpdate.  Also, here is a link to an X post from USTR with Jamieson Greer speaking to unfair trade practices in defense of the new tariffs. Coming out of all this, and an opportunity importers from China should seriously consider, is the chance to comment on "non-sensitive" goods that could be subject to tariff modifications. Here is an excerpt from the eUpdate: On June 2, 2026, USTR solicited public comments on a new Board of Trade that is intended to manage the U.S.-China bilateral trade relations, which the Trump Administration previewed after the meeting between Presidents Trump and Xi in May 2026. USTR seeks comments on non-sensitive goods that could be subject to tariff modifications on each side. The comments window closes on July 10, 2026, and any rebuttals or responses could be submitted by July 27, 2026. A link to this announcement can be found here.

In the wake of the Supreme Court's February 20 decision striking down the authority of the United States Trade Representative to impose tariffs under IEEPA, USTR has been exploring other tariff authorities, including an immediate use of Section 122. It is now turning to its more traditional, investigative authorities, though to an unprecedented degree. On March 11, 2026 and then again on March 12, the USTR initiated a suite of Section 301 investigations into the trade practices of sixty economies. The investigations constitute a necessary procedural step for the USTR prior to determining whether new schedules of 301 tariffs can be applied in those jurisdictions. The March 11 announcement relates to sixteen major economies. Asia: China, Singapore, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Japan, India, Bangladesh. Europe: European Union, Switzerland, Norway. North America: Mexico. The investigations of these jurisdictions are broad and relate to "structural excess capacity and production in manufacturing sectors."  The March 11 press release further explains: "The investigations will determine whether those acts, policies, and practices are unreasonable or discriminatory and burden or restrict U.S. commerce." The investigations announced on March 12 cover those sixteen, plus 44 additional jurisdictions and appear to have a narrower scope. They are to "determine whether acts, policies, and practices of each of these economies related to the failure to impose and effectively enforce a ban on the importation of goods produced with forced labor are unreasonable or discriminatory and burden or restrict U.S. commerce." While the prospect of renewed or even potentially increased tariffs is an unwelcome development for many companies, the ability to comment in the investigations should be recognized as an opportunity. For instance, companies can demonstrate how specific imports are essential to U.S. competitiveness or that no viable domestic alternative exists. Providing data-backed arguments now can prevent specific products needed for a company's supply chain from being swept into the initial tariff schedules. The USTR also tends to use these comments as leverage in bilateral negotiations. As such, companies should consider whether it could be beneficial to highlight the specific challenges or "structural" imbalances they may face in a particular jurisdiction. This gives the USTR the background it may need to address these issues through diplomatic or regulatory channels. Commenting as industry groups or coalitions of companies can be particularly effective. Finally, we note that companies may worry about risks of retaliation in foreign jurisdictions as a result of issues they raise in their comments. They are often right to do so. However, the USTR comment process does allow for particularly sensitive portions of comment letters to be submitted confidentially, and this option, while not perfect, can be utilized effectively. Here are the key dates for the comment process: Comment Docket Opens:    March 17, 2026 Submission Deadline:         April 15, 2026 Public Hearings Begin:       April 28, 2026 (for the investigations regarding forced labor) and May 5, 2026 (for the investigations relating to excess production)

President Trump is imposing new tariffs effective on Tuesday, February 24, under Section 122 of the Trade Act of 1974 (“Section 122”). The Section 122 tariffs replace the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), and that the Supreme Court on Friday found unlawful. Does a solid legal footing exist for the Section 122 tariffs? Given the amount of money at issue for U.S. businesses, it is not hard to imagine a new wave of litigation attacking Section 122, and again seeking refunds of Section 122 duties collected. Section 122 is a blank slate. President Trump is the first president to impose tariffs under Section 122, and indeed the first president to take any action under Section 122 according to the Congressional Research Service.[1] No court opinions thus exist that have examined executive action under Section 122. As discussed below, however, the court opinions relating to the IEEPA tariffs indicate that trade deficits are a valid basis for temporary tariffs under Section 122. Whether Section 122 will survive closer scrutiny is, ultimately, impossible to predict given the lack of any precedent or past practice as to Section 122’s scope. Basis for New Section 122 Tariffs. The new Section 122 tariffs and the prior IEEPA tariffs identified longstanding, persistent, and large trade deficits as justifying action. In particular, President Trump issued an executive order under IEEPA to address the longstanding U.S. trade deficit, and to authorize the global reciprocal tariffs.[2] Section 122 allows the imposition of tariffs “to deal with large and serious United States balance-of-payment deficits” or to “prevent an imminent and significant depreciation of the dollar in foreign exchange markets.”[3] In issuing his proclamation on Friday evening imposing Section 122 tariffs, President Trump cited the longstanding and persistent deficit as justifying the action. Thus, “[r]estricting imports through the surcharge imposed in this proclamation is required to address the fundamental international payments problems within the meaning of section 122 that I have found to exist.”[4] Section 122 Discussion in IEEPA Litigation. In the IEEPA litigation, the Court of International Trade (“CIT”) relied heavily on Section 122 to find that the IEEPA tariffs were unlawful. The CIT found that Section 122 “removes the President’s power to impose remedies in response to balance-of-payments deficits, and specifically trade deficits” from IEEPA’s scope of authority.[5] Section 122 is a “non-emergency statute with greater limitations”[6] compared to IEEPA.  The CIT, accordingly, said that Section 122 effectively displaced any tariff authority that might be read into IEEPA, at least with respect to trade imbalances. “Trade deficits…can be directly impacted by mechanisms such as import quotas and tariffs, as authorized by Section 122.”[7] The U.S. Court of Appeals for the Federal Circuit (“CAFC”) affirmed the CIT judgment, and also used Section 122 as context for interpreting IEEPA. The CAFC majority opinions cited Section 122 for the proposition that Congress delineated tariff authority carefully, and subject to procedural and durational limits.[8] The majority opinions of the Supreme Court said nothing particular about Section 122, except to say that numerous U.S. trade statutes place limits on the duration, amount, and scope of tariffs.[9] While the Supreme Court majority opinions did not discuss Section 122 in depth, Justice Kavanaugh’s dissent did. He cited Section 122, along with other statutes, as providing “expansive” power to the President to impose tariffs.[10] Justice Kavanaugh also cited Section 122 to diminish the importance of the Supreme Court’s IEEPA decision: “with respect to tariffs in particular, the Court’s decision might not prevent Presidents from imposing most if not all of these same sorts of tariffs under other statutory authorities.”[11] Thus, from Justice Kavanaugh’s perspective, Section 122’s broad authority created an alternative to IEEPA that could be used to implement global tariffs. Whether Section 122 is Vulnerable to Lawsuit. All of the above is to say that IEEPA litigation suggests Section 122 is a basis to impose global tariffs to remedy trade deficits.[12] Not a lot more can be said than this, as of today. Any reviewing court of Section 122 tariffs would have to confront a dearth of authority on Section 122. There is no existing Section 122 practice, nor are there any cases directly reviewing executive action under Section 122. A reviewing court presumably would have to afford the President at least some discretion in determining the circumstances under which Section 122 is appropriately used. President Trump’s Section 122 proclamation cites to findings of the executive branch as to the scope, severity, and impact of trade deficits. It is unlikely that a reviewing court would meaningfully subject those findings to judicial review. President Trump’s Section 122 proclamation exempts certain goods from tariffs. A potential plaintiff might argue this framework does not provide a uniform “surcharge” in the words of Section 122. The Section 122 tariffs apply to goods from all countries,[13] including those for which the United States has a trade surplus.  This might be argued to be a “surcharge” in excess of what is necessary. Section 122 does allow, but does not seem to require, the President to exempt countries from tariffs if they have large and persistent trade surpluses.[14] Conclusion. To conclude, the Section 122 tariffs are novel, as were the tariffs under IEEPA. However, unlike the IEEPA tariffs, a potential plaintiff will have to go deeper than saying the statute does not permit tariffs. Section 122 explicitly permits tariffs. The CIT, CAFC, and Supreme Court discussion of Section 122 in the IEEPA litigation suggest that Section 122 is an avenue for President Trump to impose global tariffs to address the U.S. trade deficit. Whether that authority is lawfully exercised remains to be seen.   [1]      See Congressional Research Services, Congressional and Presidential Authority to Impose Import Tariffs, at 16 (February 27, 2025), available at: https://www.congress.gov/crs_external_products/R/PDF/R48435/R48435.1.pdf [2]      Executive Order No. 14257, Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits, 90 Fed. Reg. 15,041, (April 2, 2025). [3]      19 U.S.C. § 2132(a). [4]      Presidential Proclamation, Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems, (February 20, 2026), available at: https://www.whitehouse.gov/presidential-actions/2026/02/imposing-a-temporary-import-surcharge-to-address-fundamental-international-payments-problems/. [5]      V.O.S. Selections v. United States, Slip Op 25-66, at 24 (May 29, 2025). [6]      Id. at 34. [7]      Id. at 35. [8]      E.g. V.O.S. v. United States, Slip Op. in case 25-1812, at 27 (citing Section 122 among statutes “where Congress has affirmatively granted such [tariff] power and included clear limits on that power.”). [9]      E.g. Learning Resources v. Trump, Slip Op. in 24-1287 (Roberts at Fn 4). [10]      See Learning Resources v. Trump, Slip Op. in 24-1287 (Kavanaugh Dissenting at 7). [11]      See Learning Resources v. Trump, Slip Op. in 24-1287 (Kavanaugh Dissenting at 62). [12]              Section 122 does not actually use the term “trade deficit” with respect to a condition under which global tariffs are authorized. See 19 U.S.C. § 2132(a). Instead, it uses the term “balance of payments” deficit. The CIT reasoned that since trade deficits are one type of balance of payment deficit, that Section 122 would allow global tariffs to address a trade deficit. See V.O.S. v. United States, Slip Op. 25-66 at 34-35.

February 20, 2026 started off with arguably the most economically significant Supreme Court ruling in living memory when the Court struck down the White House's use of IEEPA authority for tariffs representing roughly half of collected tariff revenue over the last year. The day ended with executive orders from an undeterred White House laying out a course for its continued tariffs strategy. What remains most uncertain is the question of refunds for IEEPA tariffs paid. The Administration's Pathway Forward Reuters reported a quote from Treasury Secretary Scott Bessent that summarizes the Administration's plans well enough: The Supreme Court has taken away the President's leverage, but in a way, they have made the leverage that he has more draconian because they agreed he does have the right to a full embargo. . . We will get back to the same tariff level for the countries. It will just be in a less direct and slightly more convoluted manner. Later in the day, in two different executive actions (here and here), the White House responded to the Supreme Court's decision by announcing specific actions: Immediate 10% tariff replacing in part the IEEPA tariffs: rescinding prior executive orders implementing the tariffs based on IEEPA but using Section 122 authority to enact a temporary 10% import duty for 150 days on most imported goods, with specific exemptions for items otherwise covered or in relation to certain trade partners. (Note: as we are writing this, President Trump reportedly  announced that the 10% will immediately be increased to 15% on most goods.) Continuing the De Minimis Exemption. Although IEEPA authority had also been used to remove the de minimis exemption for low-value shipments, the suspension of de minimis continues under IEEPA. New 301 Investigations to Come. The Administration directs the United States Trade Representative to launch unspecified Section 301 investigations into unreasonable or discriminatory foreign trade practices that restrict American commerce. It appears that Section 122 tariffs will act as a bridge between today and when the 301 tariffs can be implemented. The timeline for the new 301 tariffs is unclear, but there is a 150-day limit on the Section 122 tariffs. This could, in short, create a temporary situation where the effective tariff rate dips for several months or even most of 2026 while the 301 tariffs are completed. We also expect new 232 duties and perhaps other (as-of-today) unknown duties that will be imposed to bridge the gap. Refunds Dorsey's client update on the Supreme Court's decision explains the (hopefully temporary) uncertainty regarding a pathway to refunds. The Court’s majority opinion vindicates the plaintiffs in these cases substantively, but there remains ambiguity whether U.S. Customs and Border Protection (“CBP”) will stop collecting the IEEPA tariffs before the U.S. Court of International Trade (“CIT”) reconsiders its grant of a nationwide injunction. It is also uncertain whether CBP will issue tariff refunds to importers who have not filed their own tariff lawsuits in the CIT to challenge these tariff actions. All eyes will turn to the lower court proceedings, the Trump Administration, and CBP to see how they interpret the scope and impact of the Court’s judgment. On the assumption that importers will ultimately be able to obtain refunds of IEEPA tariffs paid, we will be providing updated advice and strategies as things develop with the CIT and CBP. For some, the pathway may be more expensive and time consuming than makes sense to pursue. In the short term, companies should be gathering data and documentation regarding tariffs paid so that they are in a strong position to make a refund claim. Follow us for more law and policy updates.