Trump swiftly replaces lost IEEPA tariffs but new levies are far less flexible

THE HIGHLY anticipated tariff decision is finally in, yet the uncertainty for container shipping remains. More tariffs are coming soon.

The US Supreme Court (SCOTUS), in a six-to-three decision on Friday morning, struck down US President Donald Trump’s tariffs under the International Emergency Economic Powers Act of 1977 (IEEPA).

Trump issued an executive order on Friday night ending all IEEPA tariffs, and immediately moved to replace them.

“The foreign countries that have been ripping us off for years are ecstatic” about the SCOTUS ruling, said Trump during a press conference. “They’re dancing in the streets, but they won’t be dancing for that long, I can assure you.”

The key questions for 2026 container shipping demand: How will new tariff levels compare to pre-ruling tariffs within each trade lane, and how soon will US importers get refunds for previously paid IEEPA tariffs, allowing them to afford more import orders?

New 10% tariffs to replace IEEPA tariffs

The US will implement a global 10% tariff under Section 122 of the Trade Act of 1974 beginning on Tuesday. They were characterised as a “temporary surcharge” in an executive order on Friday night.

Section 122 allows the president to impose a global tariff of up to 15% for 150 days “to deal with large and serious US balance-of-payments deficits”. These tariffs must be applied uniformly and not by country.

The next five months will be used as a bridge to replace lost IEEPA tariffs with other levies under Section 301 of the Tariff Act of 1974, which are implemented when a country is found to have unfair trade practices.

Existing 301 tariffs on Chinese goods enacted during the first Trump administration range from 7.5%-25%. The US Trade Representative initiated a new 301 investigation into China on October 24, 2025, related to China’s alleged failure to implement trade agreements during Trump’s first term.

More 301 actions are imminent. “We are initiating several Section 301 and other investigations to protect our country,” said Trump.

The US has also extensively used Section 232 of the Trade Expansion Act of 1962 to place tariffs on various sectors of goods for national security reasons, including levies on steel, aluminium and semiconductors. As with Section 301, these tariffs are not affected by the SCOTUS ruling.

US Trade Representative Jamieson Greer said in a statement on Friday night that the USTR would continue current Section 301 investigations into China and Brazil as well as ongoing Section 232 investigations, and would initiate “several” new Section 301 investigations.

Asked how the overall level of new tariffs will compare to pre-ruling tariffs, Trump said at one point in the press conference that “the alternatives could take in more money”, and at another point that “it depends on whatever we want them to be”.

Comparing IEEPA tariffs to the new 10% level, there will clearly be short-term tariff reductions for goods from many countries until new levies under Section 301 are implemented.

The IEEPA tariff on Brazil was 40%. The IEEPA tariff on China was 20% (10% reciprocal tariff, 10% fentanyl tariff). Under announced trade agreement frameworks, the IEEPA tariffs on Vietnam, Japan, and South Korea were 20%, 15% and 15%, respectively.

Importantly, Trump cannot unilaterally extend Section 122 tariffs after 150 days. An extension must be approved by Congress, a requirement that was acknowledged in Trump’s executive order.

The 150 days will expire in late August, just before midterm elections. The Peterson Institute said that Congressional approval is “highly unlikely”, particularly given recent Senate votes against reciprocal tariffs.

The eventual replacement of IEEPA tariffs with additional Section 301 and 232 tariffs completely changes the dynamic for Trump.

According to Supreme Court Chief Justice John Roberts, Trump was wrongfully using IEEPA “to impose tariffs on practically any product he wants, from any countries he chooses, in any amounts he selects…based on emergencies he himself has declared”, with those emergencies “unreviewable”.

IEEPA tariffs led to volatility in container shipping trades because Trump could declare tariffs in any amount — such as the 145% IEEPA tariff on China briefly levied in May 2025 — and he could do so unilaterally and immediately.

Section 232 and 301 tariffs require investigations, comment periods and public hearings. Any future threat by Trump on Truth Social that he will immediately impose a tariff will be an idle threat. Trump’s favourite and most potent deal-making cudgel, an instant tariff “with the flip of a pen”, is gone.

On January 29, Trump signed an executive order to impose an unspecified level of IEEPA tariffs on imports from countries that directly or indirectly provide crude or products to Cuba. He no longer has the power to follow through; he revoked it on Friday night.

Earlier threats — against European countries if the US couldn’t buy Greenland, against any countries doing business with Iran — are likewise nullified.

There is another avenue that Trump could pursue to replace IEEPA tariffs: Section 338 of the Tariff Act of 1930, otherwise known as the Smoot-Hawley Act. This law was specifically mentioned by Trump during Friday’s press conference.

Section 338 allows the president to levy a tariff of up to 50%; however, it cannot be levied on a whim. It can only be used against a foreign country that imports from the US that is found to treat US products less favourably than products of other countries.

According to the Peterson Institute, use of Section 338 “is an untested retaliatory tool” and “at present, no trading partner fits the Section 338 requirement for discrimination of a kind that would support the nation-specific broad tariff that is applied by the US to China under Section 301”.

Section 338 tariffs, as with IEEPA tariffs, would face a court challenge.

“If the Supreme Court bases its IEEPA decision in part on non-delegation and separation of powers [which it did], it would not be surprising if the president lost on a motion for summary judgement if the Trump administration seeks to use Section 338 to recreate the IEEPA-based tariff wall in some broad fashion,” said the Peterson Institute.

Potential for ‘chaos’ in refund process

A temporary reduction of tariffs under Section 122 versus IEEPA could lead to frontloading of cargoes in the period before the US enacts new Section 301 tariffs. Transpacific spot rates could rise and US peak season imports could be stronger and earlier than they would have been had Trump not lost the SCOTUS case.

US demand could also benefit from importer expectations for refunds of previously paid tariffs. This should improve sentiment, even if the refund process proves long and complicated.

The Tax Foundation estimates that over $160bn of IEEPA tariffs have been collected from US importers through Friday.

The Supreme Court did not rule on refunds. By affirming the lower court decision, the refund issue reverts to the US Court of International Trade.

The CIT has previously ruled that there will be refunds if SCOTUS decided against IEEPA tariffs, and that refunds will be available to importers even after Customs & Border Protection has “liquidated” IEEPA tariff payments, i.e., finalised payments 314 days after the customs entry.

The CIT ruled last month that a SCOTUS ruling would apply to “all current and future similarly situated plaintiffs” and to all types of IEEPA tariffs.

The Trump administration has acknowledged in CIT court filings that there will be refunds.

But even after the CIT implements refund procedures, money will not simply flow back to US import businesses.

Pete Mento, director of global trade advisory services at Baker Tilly, said in an online post on Friday, “The Supreme Court did not just put money back in your bank account. What they did was remove the legal foundation for a set of duties. Refunds are not automatic, they are procedural.”

Chad Bown, regional fellow at the Peterson Institute, highlighted the potential complications of an IEEPA tariff refund process during a Port of Los Angeles press conference on Tuesday, prior to the ruling.

“We’re talking about hundreds of billions of dollars that would need to be refunded to American importers. How is that going to work? We’ve never done something like this before.

“What happens after the Supreme Court rules against the administration’s tariffs? The lawyers I’ve talked to have basically said: buckle up. There could be a period of chaos — another period of chaos, if you will,” said Bown.

Supreme Court Justice Brett Kavanaugh warned in his dissenting opinion: “The refund process is likely going to be a mess.”