Electrical Market Impact of Supreme Court Decision to Repeal Tariffs Remains Unclear

The recent Supreme Court decision that President Donal Trump doesn’t have the authority to authorize tariffs, sent bloggers and cable TV political commentators into overdrive, but the immediate impact of the decision is unclear.  There’s been a lot of chatter on whether companies that have paid tariffs over the past year can get refunds, but that whole process could get tied up in the courts for some time.

Closer to home in the electrical and construction industries, there’s confusion over whether or not tariffs on copper and steel will remain in place or even be increased, because they are covered under the Section 232 national security tariffs which were instituted to protect the domestic manufacture of these and other goods and material and were not part of the Supreme Court decision. 

Several trade associations associated with the electrical, construction and distribution industries commented on the Supreme Court decision.

On Feb. 20, shortly after the Supreme Court announced its decision, Associated Builders and Contractors (www.abc.org) posted this statement on its website:

“The U.S. Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs.

“The court concluded that IEEPA does not reference tariff authority, and emphasized that Congress has enacted separate statutes governing trade actions, including Section 232 of the Trade Expansion Act, and Sections 201 and Section 301 of the Trade Act of 1974. The majority also cited separation-of-powers principles and said that broad tariff authority requires clear congressional authorization.

“Now that the U.S. Supreme Court has overturned IEEPA tariffs, the construction industry could see a modest but meaningful reduction in materials price escalation, specifically for manufactured components like specialty equipment, HVAC and electrical systems, and fixtures,” said Anirban Basu, ABC chief economist. “Of course, the administration has signaled that plans are in place to replace at least some of those tariffs through other means, so the benefits could be short-lived and completely counteracted by heightened uncertainty during the transition from one tariff mechanism to another."

“That, combined with the fact that the Section 232 tariffs on raw inputs like steel and aluminum will remain in place, means that this Supreme Court ruling could ultimately be less consequential for the construction industry.”

NEMA president and CEO Debra Phillips issued the following statement after the U.S. Supreme Court ruled to invalidate IEEPA tariffs: 

“NEMA shares the Administration’s goal of strengthening U.S. manufacturing and rebuilding domestic supply chains, especially for the electrical equipment that powers America’s grid, factories, and data centers,” she said in the press release. “Electrical manufacturers have invested nearly $200 billion in the U.S. since 2018, and that investment is accelerating as electricity demand surges. 

“The Supreme Court’s decision will shape how manufacturers assess risk, plan investments, and build supply chains in the United States. Building new facilities and bringing production home takes time. Today, many critical components and raw materials are still not available at scale domestically. 

“NEMA continues to support a predictable, targeted approach to tariffs that provides certainty for manufacturers and aligns trade policies with domestic manufacturing and infrastructure objectives. With a practical approach, tariffs can support onshoring, strengthen U.S. competitiveness and keep grid and energy projects on track to deliver benefits to American workers and communities.” 

The National Association of Wholesaler-Distributors (NAW), posted this statement on www.naw.org: “After the Supreme Court dealt a clear and decisive repudiation to Trump’s use of emergency powers to impose taxes in the form of tariffs, we have learned a few things. Trump’s purpose of those tariffs is evolving. Initially pursued to ‘level the playing field’ and spark a negotiating process, they now seem more clearly to raise revenue. Trump’s move to initiate Section 122 blanket tariffs of up to 15% suggests the era of negotiating trade deals is done.

“Trump’s rhetoric on refunds will be interesting over the next few days. He has an amazing opportunity to add billions of dollars of stimulus to the economy at the most efficient level; by giving those refunds back to the business that paid the duty and processing those claims quickly. Will he choose to stimulate the economy or keep the money?”