US tariff refund could be a ‘mess’ but a psychological deterrent for future: SBI report

New Delhi, Feb 22 (IANS) The tariffs collected from various jurisdictions by the US administration range from $160-175 billion (Chinese companies have paid the highest likely), and the refund could be a ‘mess’ but it would also be a psychological deterrent in imposition of future tariff structure, according to a new SBI Research report.

US President Donald Trump has now raised global tariffs to 15 per cent, invoking Section 122 of the Trade Act of 1974, a move that escalates his trade offensive a day after the US Supreme Court struck down much of his earlier tariffs.

According to the report, unscrapping of the tariff structure by the court can upend uncertainty going forward while jurisdictions need to put in place counter intuitive negotiation to position themselves strategically in the intermittent period where ultimate power lies with a delicately balanced US Congress.

“The convergence between inter-sovereign treaties and juristic persons on effective tariff structure can be a melee if not a mess,” it argued.

Under the Trade Act, the US President can impose temporary import surcharges (up to 15 per cent) or quotas to fix US balance of payment issues. It lasts up to 150 days max, unless Congress extends via legislation.

The new tariff has exemptions, including goods from Canada and Mexico that comply with the USMCA, as well as specific, already-in-place national security tariffs.

“It is expected that during this time, the Administration would complete investigations and levy tariffs using Section 301 and Section 232,” said the report.

Indian companies, as also the world, face Section 232 tariffs on steel and aluminium, automobiles and copper, etc as the section has not been scrapped.

“It will be intriguing to watch how the trade deals among multiple sovereigns are interpreted at private, independent legal, artificial, or “juristic” persons end (the firms who filed the case and won a favourable judgement for refund and scrapping of the tariff structure) and how the shifting sands of the bilateral relations add or abate the landscape,” said the report.

—IANS

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