US President Donald Trump's trade policies have suffered a severe blow on the legal front, the echo of which is being heard in the markets all over the world. Perhaps for the first time in the business history of America, such a huge upheaval is being seen, where the government may have to pay refunds of billions of dollars due to its own policies. The matter is not just a political defeat, but it is going to have a direct impact on all those companies and the global economy that do business with America. Let us understand in detail what this whole matter is and how it is going to affect the global business world.
Richard Eaton, a federal judge from New York, has recently given a very important decision. He has clarified that all the companies who have paid invalid tariffs (import duties) imposed by the government are entitled to get their money back. This entire controversy is related to the huge tax imposed under the 'International Emergency Economic Powers Act' (IEEPA) of 1977.
Only last month, the US Supreme Court had rejected this double-digit import duty of the Trump administration, terming it unconstitutional. Now Judge Eaton has made it clear that the scope of refund will not be limited to only a few companies who have approached the court, but it will apply equally to all importers who have paid duty under this emergency law.
The financial impact of this court decision is surprising. If we look at the figures, till mid-December the US government had collected a huge amount of about $ 130 billion (about Rs 12 lakh crore) through these disputed tariffs. It is estimated that if the recovery made after December is included, then the total refund figure can reach 175 billion dollars i.e. about Rs 16.12 lakh crore.
The court has given this order while hearing the case of Tennessee-based filter manufacturing company 'Atmus Filtration'. The Trump administration had made every legal effort to slow down the refund process, but the US Court of Appeals rejected this argument of the government and directed to dispose of the case expeditiously.
After this strategic defeat from the court, the government is also not sitting idly by. US Treasury Secretary Scott Besant has indicated that the administration is going to toughen its stance. After the decision of the Supreme Court, the new universal tariff of 10% which was implemented by Trump is now being prepared to increase it to 15%.
According to Besant, this new tax slab can be announced this week. However, under the existing legal provisions, this new tariff structure can remain in effect only for 150 days.
American officials now have only five months time. During this period they are exploring new legal options to reinstate the old tariff rates. The Treasury Secretary believes that the process of imposing tariffs under 'Section 301' and 'Section 232' may be a little slow, but they are legally stronger.
