BOULDER, Colo. (BRAIN) — Industry members praised the Supreme Court’s decision Friday that ruled illegal President Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs. But they aren't holding their breath for the benefits to trickle down to the marketplace.
Trump had used IEEPA to impose his "reciprocal" tariffs and, separately, tariffs based on purported emergencies due to fentanyl imports. The Supreme Court decision was in a case brought by several states and small businesses, including Vermont’s Terry Precision Cycles.
But after the decision Trump said he'd impose an immediate, temporary, 10% tariff across the board using a different law to replace the IEEPA tariffs.
Importers should eventually be able to recover the millions in tariffs they’ve paid under the now-illegal use of IEEPA, but the Supreme Court decision did not make any orders on that, so details will have to be decided by lower courts. On the upside, on Feb. 6 Customs and Border Protection announced an automated electronic refund portal was operational, which could make the process easier. But on Friday industry group PeopleForBikes said, “the process and timeline remain unclear” for refunds.
Industry consultant Patrick Cunnane called the ruling “a landmark victory for the rule of law” that will provide “vital relief for our industry.”
“(T)he Court has restored a level of economic stability that we need,” Cunnane said in a text to BRAIN. “Crucially, this decision opens the door for our industry to pursue recovery of the millions in duties paid under these unlawful measures.
“However, we must remain engaged because while this specific authority was checked, the administration still holds significant power under Section 232 and 301,” Cunnane said, referring to trade laws that allow the president to impose certain tariffs legally.
“We must watch closely to see if and how the White House attempts to pivot these same trade barriers to those alternative legal avenues,” he said.
Cunnane made the remarks before Trump made a social media post Friday that called the justices who voted for the 6-3 decision “very unpatriotic” and “FOOLS.” The post said he would use Section 122 to impose the 10% tariff while preparing other legal methods for restoring tariffs. Section 122 allows him to impose tariffs for a maximum of 150 days.
Section 122 allows presidents to impose temporary tariffs to respond to “large and serious United States balance-of-payment deficits.” The law allows the president to determine when it is appropriate without any specific investigation.
Arnold Kamler, chairman of Kent International, also praised the decision.
"I am very proud of the Supreme Court for following the laws of the United States,” he told BRAIN in an email. Kent is a major importer of bikes for the mass market, sourcing from several nations in Asia. The company closed its assembly plant in South Carolina last year due to increased tariffs on imported components.
Bob Margevicius, a Specialized Bicycle executive and industry advocate, said the industry is unlikely to get refunds that will materially change the marketplace or company strategies.
“While the ruling is significant from a constitutional and statutory standpoint, its practical impact on the bicycle industry may be more limited than headlines suggest,” Margevicius told BRAIN.
He said the industry had mitigated the effects of tariffs in several ways, including margin concessions by brands and retailers. The value of the U.S. dollar relative to foreign currencies also has mitigated some of the costs.
“Together, these mechanisms have absorbed a substantial portion of tariff pressure,” Margevicius told BRAIN. “As a result, the Court’s ruling is unlikely, in the near term, to produce broad cost reductions or widespread duty refunds for the industry.”
Jacob Heilbron, CEO of Kona Bikes, said no one should expect any immediate refunds or relief from continued tariffs.
“I think the industry needs to get a firm footing on the tariff situation before adjusting prices,” Heilbron said in an email to BRAIN. “As far as collecting refunds, we’ve been unable to get duty drawbacks for product we’ve exported from our U.S. warehouse for more than a decade.
“We also need to temper our expectations that refunds will be made, and made in a timely manner,” he said.
Industry consultant Jay Townley is even more dubious about refunds — he's not sure Customs will even stop collecting the tariffs that have been ruled illegal.
"It could be some time (like months) before CBP (Customs and Border Patrol) actually stops collecting the 'illegal' tariffs. Remember this is an administration that has told a number of federal judges to 'stuff-it,'" Townley said in an email to BRAIN.
"CBP has to wait for the Court of International Trade (CIT) to issue new instructions before changing its electronic filing system and absent instructions and programming changes from CBP, importers of record will have to make payment of the 'illegal' tariffs or have their goods impounded," said Townley, who is an advisor to the National Bicycle Dealers Assocation and principal in the Human Powered Solutions consultancy.
Townley said it will be a long and costly process to get refunds and they are unlikely to trickle down from importers to the marketplace. "The importers of record are going to bank what they can get and have nothing to pass along to their customers — who will have nothing to give back to consumers," he said.
