President Trump announced a uniform 15% tariff imposed under Section 122 of the Trade Act of 1974 after the U.S. Supreme Court ruled that his earlier use of emergency powers to set country-specific levies was unlawful. The administration initially signaled a 10% rate in a White House communication, but the president subsequently increased the figure to 15%.
In response to the court decision and the administration's new order, analysts at Wolfe Research organized and answered a set of frequently asked questions they have received regarding the practical consequences of the ruling and the mechanics of the 15% Section 122 levy. The analysts who contributed to the note include Tobin Marcus and Chutong Zhu.
How much does the Section 122 15% rate reduce the overall tariff burden?
Wolfe Research's assessment is that the reduction in aggregate tariff impact is limited. The analysts note that the Section 122 tariffs replicate only part of the prior footprint the Supreme Court struck down. Specifically, the 15% across-the-board rate still covers 78% of the tariffs that the court invalidated the previous Friday.
When taken together with the other tariffs that remained in effect, substituting the prior "reciprocal" tariffs with Section 122 at 15% lowers Wolfe's modeled effective tariff rate from 15.76% to 14.23%. The analysts characterize this as approximately a 10% reduction in the total impact of tariffs rather than a wholesale removal of tariff pressure.
Although the aggregate rate changes only modestly, the analysts caution that the distributional effects vary by country. They identify Brazil and China as the primary beneficiaries of the shift, with U.S. import tariffs on goods from those countries reduced under the new framework, while Peru and the United Kingdom are noted as temporary losers who would face relatively higher tariffs under the Section 122 regime.
Do the 15% Section 122 tariffs replace individualized rates countries negotiated with the White House?
Wolfe Research answers in the affirmative. The analysts explain that the customized tariff rates negotiated directly between the executive branch and individual trading partners had been implemented through the emergency authority the Supreme Court ruled was unlawfully invoked. Because those bespoke commitments were established under an authority the court rejected, Wolfe says those negotiated rates no longer apply.
As the analysts put it, the legal ability to collect any tariffs depends on a valid statutory underpinning. No matter what a counterpart may have "agreed" to, the United States needs an authorized statute to levy those duties; legally the costs are borne by U.S. importers, not the foreign counterparties to the deals. For now, the analysts say, Section 122 is the only operable authority, and it is limited to a uniform maximum of 15% across countries.
Will countries withdraw from the agreements they struck with the U.S. under the prior emergency authority?
Wolfe Research judges that large-scale withdrawals are unlikely. The analysts argue that the bargaining calculus that led countries to accept those deals rather than face reciprocal tariffs has not meaningfully changed; accordingly, trading partners are expected to continue to prefer the terms of the negotiated deals over the alternative of facing higher reciprocal duties.
The note also highlights that in Europe there was a pause in domestic ratification work on a trade agreement signed with the United States last year, as officials in Brussels sought clarity about Washington's tariff plans. Specifically, the main political groups in the European Parliament announced they would suspend legislative work on the accord pending more information. Wolfe Research nonetheless expects the European Union will not repudiate the pact in a way that risks tariff escalation.
Is the Section 122 tariff indefinite?
Section 122 is temporary by statute. The levy the president has ordered is limited to a period not exceeding 150 days unless Congress acts to extend it. Observers and analysts have flagged uncertainty about how the tariffs will be handled when that period expires, and whether the administration could employ procedural approaches to prolong or renew the duties.
Wolfe Research notes that some commentators have speculated about strategies such as allowing the 122 authority to lapse and then declaring a new emergency to restart the 150-day clock. The analysts dismiss this as legally fragile, writing that the approach appears "too cute to withstand legislation." They point to the executive order invoking Section 122, which explicitly acknowledges the 150-day cap and states that the time limit can be extended only by Congress: 'Section 122 authorizes the President to impose, for a period not exceeding 150 days unless extended by an Act of the Congress.'
The analysts read the executive order language as evidence the White House does not intend to rely on procedural workaround to keep 122 tariffs in place indefinitely. They also note that the president's recent comments about Section 301 investigations suggest an intent to transition toward statutory authorities that are more durable than Section 122.
What role could Section 301 play as a follow-on authority?
Wolfe Research describes Section 301 as a potential bridge from the temporary 122 tariffs to a more permanent legal basis for targeted duties. Section 301 allows the administration to impose trade measures to counteract unfair trade practices, with particular focus on issues like intellectual property theft and coerced technology transfer. Historically, Section 301 has been used for country-specific duties, including those applied to China.
The analysts explain that Section 301 enumerates a range of remedial tools, including tariffs, import restrictions, or negotiated remedies, giving the administration operational flexibility similar to what it sought to use via the 1977 International Emergency Economic Powers Act. Importantly, Section 301 requires that an investigation be completed before tariffs under that statute can be put in place. Given the 150-day period that Section 122 permits, Wolfe Research cautions that the White House may have limited time to conclude the requisite Section 301 probes for multiple trading partners. While investigations into some countries such as China, Vietnam, and the European Union have been completed, other major partners would require new probes before Section 301 action could be taken.
Will importers who paid tariffs imposed under the prior emergency authority receive refunds?
Wolfe Research expresses confidence that refunds are legally entitled and that major importers will pursue them. The analysts state that established refund procedures exist through which importers can seek reimbursement of unlawfully collected tariffs. Given the scale of the sums involved, Wolfe expects big importers will file for those refunds.
Still, the analysts acknowledge that the refund process has been a significant source of uncertainty for companies, with other observers warning that reimbursements may only come after protracted legal challenges. The U.S. Customs and Border Protection agency announced it would stop collecting the tariffs invalidated by the Supreme Court at 12:01 a.m. EST (05:01 GMT) on Tuesday, but it did not explain why duties were collected at ports of entry in the days following the ruling, nor did it specify whether importers who already paid those levies would automatically receive refunds.
Practical takeaways and market considerations
Wolfe Research’s answers underline several practical realities: the 15% Section 122 rate narrows but does not erase the tariff footprint; country-level winners and losers will differ from the prior reciprocal framework; the 122 authority is time-limited and subject to congressional prerogative; Section 301 represents a possible path to more targeted, lasting measures but requires completed investigations; and importers that paid unlawful tariffs have a legal path to seek reimbursement, although timing is uncertain.
For market participants and sectors sensitive to trade measures, the note reinforces that tariffs will likely remain an active policy lever in the short term, but the legal mechanisms and timelines for converting temporary duties into longer-term policy are unclear. The administrative and legislative interplay described by Wolfe suggests continued policy volatility until either Congress acts or the administration completes Section 301 investigations and decisions.
The analysis above summarizes the questions Wolfe Research has prioritized in the immediate aftermath of the Supreme Court decision and the White House’s Section 122 order. The firm’s conclusions emphasize legal constraints, the limited scale of the aggregate tariff reduction, and the potential pathways and frictions for any durable extension of U.S. trade measures.