The Supreme Court struck down a bunch of Trump's tariffs. Now what?

Summary

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Planet Money – NPR

Episode: The Supreme Court struck down a bunch of Trump's tariffs. Now what?
Date: February 21, 2026

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Brief Overview

This episode tackles the Supreme Court’s landmark decision overturning a broad set of tariffs imposed by President Trump under the International Emergency Economic Powers Act (IEEPA). The hosts dig into what the ruling means for small businesses like Kara Dyer’s, the complexity of pursuing refunds, new markets springing up for speculative refund claims, and the broader implications for tariff policy moving forward. The episode features insights from trade experts, a customs lawyer, and business owners directly impacted by the volatile trade environment.

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Key Discussion Points & Insights

1. The Supreme Court’s Ruling on Trump’s Tariffs

• [00:22–03:17] The Supreme Court declared Trump’s sweeping tariffs (imposed via IEEPA, a law never before used this way) illegal.
• The ruling affects tariffs imposed on a vast array of products from nearly every country, with businesses hopeful they might recover billions already paid.
• Kara Dyer, a small business owner, expresses relief and hope for clarity and possible refunds but also uncertainty about what comes next.
• Notable Quote:
  “Now they've ruled that it's illegal. Now we need to take some action and get those refunds back into the hands of businesses.” – Kara Dyer [01:44]

2. How Did We Get Here? The Mechanics of the Law

• [04:18–06:53] Legal expert Kathleen Claussen explains that IEEPA wasn’t crafted for tariffs:
  • The law’s language says the President may ‘regulate importation’ but doesn’t specify authority to impose tariffs.
  • The Court held “those words cannot bear such weight,” rejecting the administration’s broad interpretation.
• Notable Quote:
  “The Chief Justice says those words cannot bear such weight. Those words cannot bear such weight. That's the key phrase.” – Kathleen Claussen [06:07]

3. Will Anyone Get Their Money Back?

• [06:53–12:19] Host Jeff Guo asks directly if refunds are forthcoming.
  • Prof. Claussen: There’s no clear path—Supreme Court stayed silent on refunds.
  • Customs lawyer Maureen Thorson identifies three possible paths:
    • Option 1: File a post summary correction with U.S. Customs (limited time window – 300 days after import).
      • “You can do an oopsie, take backsies.” – Kara Dyer [09:29]
    • Option 2: File a lawsuit against the U.S. Government.
    • Option 3: Wait for an official process from the administration (speculative and slow).
  • For most consumers, refunds are unlikely unless they paid customs duties directly (not just higher prices due to tariffs).
• Notable Quote:
  “You got a long, long road to hoe there, my friend, if that's what you're going for.” – Kathleen Claussen [07:01]

4. The Rise of a “Tariff Refund Market”

• [12:19–17:19] A niche financial market emerges for buying and selling speculative tariff refund rights.
  • Many companies, stuck with uncertainty, sold their possible future refunds at a discount to hedge funds via brokers like Wes Harrell (Seaport Global).
  • Deals started at about 20% payout (hedge funds gamble on winning full refunds); post-Supreme Court, sellers fetch up to 40%.
  • Apparel and footwear importers especially active.
  • “No modern parallel for the magnitude of this unwind.” – Wes Harrell [16:58]
• Notable Quote:
  “There are hedge funds, Wes's clients, that … are looking for ways to make bets on litigation or anything weird or risky … At what price would you be interested in buying it?” – Mary Childs [14:07]

5. Not All Trump Tariffs Are Gone – The Limit of the Ruling and New Moves

• [18:40–22:28] The Supreme Court decision only nixes tariffs imposed using IEEPA—not those set using other laws.
  • Section 301, 232, and similar laws still allow targeted tariffs (like many on China). The ‘three-digit’ statutes, as trade insiders say, still stand.
  • Trump pivots and announces a new 10% across-the-board tariff under Section 122—a never-before-used law that could allow temporary tariffs (for balance-of-payments reasons, up to 150 days with possible Congressional extension).
  • Legal experts anticipate new lawsuits around this strategy as courts and Congress test the boundaries.
• Notable Quote:
  “That's the big news of the day … welcome to Section 122. It allows the President to impose a tariff of up to 15% for a limited period of time to address a balance of payments deficit.” – Kathleen Claussen [20:54]

6. The Real-World Impact on Small Businesses & Consumers

• [22:28–26:36] Kara Dyer describes how the unpredictability and cost of tariffs forced her to shrink orders, change suppliers, and rethink her business strategy.
  • She resisted offers from Chinese suppliers to underreport shipments (“tempting, but super risky”).
  • Dyer spent the year diversifying products (like a new Red Riding Hood set), only placing a big container order after seeing signs tariffs might end—saving around $15,000 due to the Supreme Court’s ruling.
  • She’s cautiously hopeful but wary as new tariffs loom: “I don’t know if it’s the end of tariffs or not … today I want to feel hopeful about it.”
  • For Dyer, the $20,000 she paid in tariffs is significant and worth pursuing a refund, but she worries about the cost and complexity of hiring a lawyer.
• Notable Quote:
  “I feel angry about that, especially when it really felt like just while it was going on, you didn't see any reason for it. Were we getting a better deal from China, you know, because we did this? No.” – Kara Dyer [26:02]

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Memorable Quotes by Segment

| Timestamp | Speaker | Quote | |:-----------:|:------------------:|:------| | [01:44] | Kara Dyer | "Now they've ruled that it's illegal. Now we need to take some action and get those refunds back into the hands of businesses." | | [06:07] | Kathleen Claussen | “The Chief Justice says those words cannot bear such weight. Those words cannot bear such weight. That's the key phrase.” | | [07:01] | Kathleen Claussen | "You got a long, long road to hoe there, my friend, if that's what you're going for.” | | [09:29] | Kara Dyer | "An oopsie take backsies. Yes." | | [14:07] | Mary Childs | "There are hedge funds, Wes's clients, that … are looking for ways to make bets on litigation or anything weird or risky … At what price would you be interested in buying it?" | | [16:58] | Wes Harrell | "There really is no modern parallel for the magnitude of this unwind." | | [20:54] | Kathleen Claussen | "That's the big news of the day … welcome to Section 122. It allows the President to impose a tariff of up to 15% for a limited period of time to address a balance of payments deficit." | | [26:02] | Kara Dyer | "I feel angry about that, especially when it really felt like just while it was going on, you didn't see any reason for it. Were we getting a better deal from China, you know, because we did this? No." |

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Important Timestamps

• [00:22–03:17] Introduction; Why the ruling matters for businesses
• [04:18–06:53] Legal reasoning behind the Supreme Court’s decision
• [06:53–12:19] Navigating refund options post-ruling
• [12:19–17:19] The speculative market for tariff rebate claims
• [18:40–22:28] Which tariffs are still standing, Trump’s new move with Section 122
• [22:28–26:36] How tariffs upended small business; real-world anecdotes

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Tone & Style Notes

The episode maintains Planet Money’s trademark mix of playful curiosity, economic clarity, and journalistic rigor. The hosts are conversational, making complex trade law and financial speculation not just understandable, but genuinely interesting. Guests (especially trade and customs lawyers) embrace the “nerd out” aspect, but explanations remain accessible and lively.

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Final Takeaway

The Supreme Court’s takedown of Trump’s IEEPA tariffs is a huge legal and economic reset, with potential refunds on the line—but distribution will be complicated and slow. Meanwhile, both hedge funds and hopeful small business owners are scrambling for a piece of the action, and the trade war roller coaster is far from over, with new legal and political maneuvers already in motion.

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Transcript

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[Kara Dyer]

This is Planet Money from npr.

[Sarah Gonzalez]

Okay, Kara, how do you feel? You saw.

[Kara Dyer]

Yes, I saw the news, and I never thought this day would come. Honestly, it's like, was the Supreme Court ever going to rule on it? Like, you know, were we going to be in this kind of, like, purgatory forever? But it has come, so I'm so happy.

[Sarah Gonzalez]

This is Kara Dyer. She is a small business owner in the U.S. and the big news, the U.S. supreme Court has said that President Trump's giant, sweeping tariffs that he imposed early last year are illegal.

[Jeff Guo]

Dunzo.

[Sarah Gonzalez]

This is huge news. We are talking about his tariffs on products from all over the world, almost every single country, a different percentage tariff on each of them.

[Jeff Guo]

And those percentages, they've gone up and down and up and down for more than a year. But from early on, there were lawsuits against President Trump states and companies and individuals saying that these tariffs, they are not legal. And now a lot of businesses and people like Cara, they're thinking maybe they could get some of the money they spent on those tariffs back.

[Sarah Gonzalez]

Okay, wait, so. So what do you do now?

[Kara Dyer]

Well, I've kept meticulous records, and I will be asking for. Yeah, yeah, I did.

[Sarah Gonzalez]

Just every little fee and tariff.

[Kara Dyer]

Yes, absolutely. Okay. Now they've ruled that it's illegal. Now we need to take some action and get those refunds back into the hands of businesses.

[Jeff Guo]

So far, the US has collected more than $100 billion under these now illegal tariffs.

[Sarah Gonzalez]

That's a lot of refunds.

[Kara Dyer]

Yeah. Right. Yes.

[Sarah Gonzalez]

How do you know what to do, how to go about it?

[Kara Dyer]

I don't. Yeah, but now is when they would have to, like, start and figure out a process to get those refunds going. So I'm also hopeful that they'll, you know, that that will happen, that they

[Sarah Gonzalez]

will give you very clear guidance on

[Kara Dyer]

how to get your money back.

[Sarah Gonzalez]

Might entail a little digging on your part, if I had to guess.

[Jeff Guo]

Hello, and welcome to Planet Money. I'm Jeff Guo.

[Sarah Gonzalez]

And I'm Sarah Gonzalez.

[Mary Childs]

And I'm Mary Childs. About a year ago, the Trump administration tried to use a law that was not designed for tariffs to impose the biggest, most disruptive tariffs we've seen in about a century.

[Sarah Gonzalez]

This morning, the Supreme Court came back and said, no, you can't use that law to impose tariffs.

[Jeff Guo]

Today on the show, why are the tariffs illegal. And what does this mean for businesses, for Cara, for the rest of us? Are any of us going to get refunds?

[Sarah Gonzalez]

Yeah. And also, what does this mean for the Trump administration's whole tariff policy? And what's up with this new 10% tariff he just announced today?

[Mary Childs]

Also, a market for tariff refunds is already booming.

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[Sarah Gonzalez]

What did the Supreme Court actually say today?

[Jeff Guo]

For that we called up Georgetown law professor Kathleen Claussen, who is an expert on the law of tariffs. We had her on the show back when Trump's big new tariffs were first getting challenged in the courts.

[Sarah Gonzalez]

She was the one who had explained to us at Planet Money that basically Trump created these big new tariffs under a law that no president had ever used before to create tariffs. That law is called ipa. It stands for the International Emergency Economic Powers Act. And back when we first talked to her, here's what Kathleen told us.

[Kathleen Claussen]

We trade lawyers don't think of IIPA as a trade law. That this is not something that I teach in my trade class. It's there, but it's not on the short list for how we think about imposition of tariffs in the U.S. economy.

[Sarah Gonzalez]

And today the Supreme Court told us what they think about IEFA and how Trump has been using it.

[Jeff Guo]

Actually, the justices had a lot of thoughts about IIPA. There are multiple opinions. The whole thing is 170 pages.

[Kathleen Claussen]

We knew it was gonna be long, but 170 pages really is something.

[Jeff Guo]

Yeah. So this decision, it kind of landed on your desk with a thump.

[Kathleen Claussen]

It's a real thumb. I was going to show you. I had printed it, but I printed it double sided and two pages per sheet just to save the paper.

[Sarah Gonzalez]

Kathleen says the takeaway from all those 170 pages really boils down to just a few key parts where the Court is trying to just interpret the literal words of the law.

[Wes Harrell]

Yeah.

[Jeff Guo]

You see, in iipa, it doesn't literally say the President can impose tariffs. It says something much more visible, vague. It says the President may, quote, regulate importation, like the importation of goods.

[Kathleen Claussen]

It was simply a question of does the statute, aipa, allow the President to impose a tariff on the basis of those words?

[Sarah Gonzalez]

Today we got the answer.

[Kathleen Claussen]

The Chief justice says those words cannot bear such weight. Those words cannot bear such weight. That's the key phrase.

[Jeff Guo]

Is that like a mic drop moment?

[Kathleen Claussen]

I can imagine the Chief justice doing the mic drop. I don't think he did today. I wasn't in the room, but I'd be surprised if he did the mic drop.

[Jeff Guo]

But he could have.

[Kathleen Claussen]

He could have.

[Jeff Guo]

Basically, those are the most important words the Supreme Court said today. It said those words in ipa. Regulate importation. They do not mean that the President can create giant, sweeping across the board tariffs on countries around the world. That is not what the law means. The Court said.

[Sarah Gonzalez]

Kathleen says it is very, very clear. No ambiguity here. These particular tariffs, she says, are illegal. Over and out.

[Jeff Guo]

So let me ask you the obvious question, which is, are any of us going to get our money back?

[Kathleen Claussen]

You got a long, long road to hoe there, my friend, if that's what you're going for. Look, the Supreme Court today has said nothing about refunds. We don't have any guidance on how or if that's going to happen.

[Jeff Guo]

So it sounds like what you're saying is I really got to talk to a customs law.

[Kathleen Claussen]

Always good advice.

[Sarah Gonzalez]

And as it happens, we do happen to have a customs lawyer on speed dial. We sure do, Maureen Thorson. And let's just say today is kind of like her day.

[Jeff Guo]

Oh, yeah.

[Kara Dyer]

I've spent 25 years doing nothing but nerding out on this stuff, and now I know way more than anybody ever wanted to know.

[Jeff Guo]

Maureen is an international trade lawyer. She's a partner at Wiley Rain who specializes in customs law. And. And we wanted to ask Maureen. Yeah, sure. How are companies gonna try to get refunds for all the tariffs they paid on the goods they've imported to, you know, sell to us? And more importantly, though, what about regular customers like me and Sarah?

[Sarah Gonzalez]

Yeah, we've been paying tariffs indirectly, directly on all kinds of things for over a year. Blueberries, dresses, toys, those lamps I got off Temu. There you go. So, like, what are we gonna get that money back?

[Jeff Guo]

And as you can imagine, we are not the only ones bombarding Maureen with questions on this day.

[Kara Dyer]

I feel like the snakes just keep popping out of the peanut brittle can. That is my inbox today.

[Jeff Guo]

And what are the questions that people are asking you?

[Kara Dyer]

Well, okay, what happens next? Can I get a refund? When can I get a refund? How do I get a refund?

[Jeff Guo]

Maureen says if you were to vastly oversimplify this very complicated world of customs law, there are basically, let's say, three ways that companies could, in theory, get refunds on the tariffs they paid the

[Sarah Gonzalez]

tariffs that are now deemed illegal.

[Jeff Guo]

So option number one, turns out customs actually already has a process to get refunds on your tariffs. Because, you know, the US has had lots of tariffs over the years and there have always been people who have maybe over calculated how much they owe in tariffs. So companies can go to customs and

[Sarah Gonzalez]

say, like, hi, excuse me, can I

[Jeff Guo]

get a refund on my tariffs? I kinda overpaid.

[Sarah Gonzalez]

Thanks.

[Jeff Guo]

But there is a whole process to it and also a limited time window

[Kara Dyer]

up until day 300. You can file what's called a post summary correction, where you essentially say, hey, Customs, I messed up my original entry. Here's the new corrected documents. Please accept my correction.

[Jeff Guo]

You can do an oopsie, take backsies.

[Kara Dyer]

An oopsie take vaccine. Yes.

[Jeff Guo]

Okay, but what if you miss the deadline to do your tariff? Take backsies, oopsies. Maureen says with these tariffs, the answer is not totally clear. But you could always go to court.

[Sarah Gonzalez]

That's option two. You could just sue the US Government. You could file a lawsuit that says, hey, I paid these tariffs. The Supreme Court just said that these tariffs are illegal, so please give me my money back.

[Jeff Guo]

In fact, a lot of companies like Costco and Toyota and Goodyear, they started filing these tariff refund lawsuits even before the Supreme Court made its decision.

[Sarah Gonzalez]

And now there's one more possibility that Maureen talked about, and this is one that it seems like a lot of people are hoping for, which is that maybe the Trump administration is going to create some kind of official, easy process for everyone to get their IPA tariff refunds, though that might take a while.

[Kara Dyer]

Now, people might not want to wait, but everyone's sort of speculating and trying to figure out, like, try to read tea leaves about all of this.

[Jeff Guo]

So what about us, right? Like, can regular people get a refund on the tariffs we paid on, you know, that lamp I bought?

[Sarah Gonzalez]

And Maureen says, well, it depends. Did you actually pay the tariff directly to customs, or was it just like, priced into your purchase if you were

[Kara Dyer]

like, I think as a taxpayer and consumer that I have been paying more for Kitty Litter since last year. Because kitty litter companies across the globe are raising their prices because of tariffs, then? Probably not.

[Sarah Gonzalez]

Okay, but say one of us, like, hypothetically bought a fancy dress from the UK for their little sister's wedding and then was surprised with a big tariff bill once that dress arrived at customs. Can I go to the customs window and ask for that refund, hypothetically?

[Jeff Guo]

Right, right, hypothetically. Maureen says that's actually really unclear because this customs refund window we've been talking about, it's not available to everybody, and it was actually never designed to deal with this specific kind of big tariff. But she says you could always file a lawsuit to get your money back.

[Kara Dyer]

Yeah.

[Sarah Gonzalez]

I think we at Planet Money are definitely gonna have to sue, like, just to see what the process is, what happens. Right. This is the Planet Money way.

[Jeff Guo]

Yeah. What could be more fun than a lawsuit, Sarah?

[Sarah Gonzalez]

All right, so I'll look into that.

[Jeff Guo]

Yes. You're going to go look into how we're going to sue the federal government.

[Sarah Gonzalez]

Happy to.

[Kathleen Claussen]

Okay.

[Sarah Gonzalez]

Meanwhile, a lot of companies didn't want to wait for the Supreme Court decision or to figure out if they were going to get a refund. So they found a way to get pre refunded, if you will. Our co host, Mary Childs actually talked today to someone who has been getting companies these pre refunds, these refunds in advance, which is a whole brand new baby market.

[Mary Childs]

Yes, the market for tariff refunds. And there are hundreds of millions of dollars of deals that have already been done in this little baby market.

[Sarah Gonzalez]

This person told me, okay, so since the IPA tariffs started, companies have been paying the tariffs all while knowing that they might get this big pile of money back should the tariffs be ruled illegal. Right, right.

[Mary Childs]

So no one could know if the Supreme Court would decide whether they were legal or illegal. So it was this annoying uncertainty for companies, like maybe, maybe they would get refunds in the future.

[Sarah Gonzalez]

Yeah, but companies don't want maybe money in the future. Right. They want for sure money today.

[Mary Childs]

So they wanted to get rid of this annoying, complicated risk, even if it cost them a little. And whenever anyone anywhere in the world

[Wes Harrell]

utters those words, certainly it's a call

[Mary Childs]

to action for us, us, Wall street and hedge funds. This is Wes Harrell. He's the head of a trading group at Seaport Global. He's a broker, and he says this new baby market was born around November. Suddenly, Wes and his colleagues start getting calls.

[Wes Harrell]

We start to get phone calls from importers, and we are also making outgoings to importers and basically Anyone that we believe has paid a tariff since Liberation

[Sarah Gonzalez]

day, these importers, these companies are like, okay, we have these potential tariff refund claims. Does anyone want to basically buy this potential refund or part of it, meaning, like, give me, the company, a fraction of the refund that I might get, and then you, the buyer, can get the full refund if it ever comes.

[Mary Childs]

And do you know who has cash and who might want to buy this kind of stuff? Hedge funds.

[Sarah Gonzalez]

Hedge funds.

[Mary Childs]

Hedge funds. There are hedge funds, Wes's clients, that focus on bankrupt companies or near bankrupt companies who are looking for ways to make bets on litigation or anything weird or risky in an odd way or overly complicated things that might make money. And Wes's job is to call those people up and say, hey, I have this weird, risky, in an odd way, overly complicated thing that might make money. At what price would you be interested in buying it?

[Sarah Gonzalez]

So here's how it has been working before this Supreme Court decision. Let's say I'm a dress company and that I have paid $20,000 in tariffs from importing dresses. That is potentially $20,000 that I might get refunded. I. I would go to Wes and say, I don't want to deal with this uncertainty, with this risk. Can you sell it? I don't need to get the full $20,000 back. I just want something like 20% of my potential refund. Give me just 4k of it.

[Mary Childs]

And I'm obviously a hedge fund. Wes calls me and I'm like, listen, yeah, I would love to buy that potential future money, but the Supreme Court might say it's legal and I will get nothing. So I'm only willing to pay like 20%, and I might get 16 grand in profit. It's not bad.

[Sarah Gonzalez]

Weirdly, the seller and the buyer were very aligned when this baby market was popping up.

[Wes Harrell]

The market was. Was oddly well defined from a very early stage in this.

[Mary Childs]

And one industry in particular, Wes says,

[Sarah Gonzalez]

was really into it.

[Wes Harrell]

We found that there was a decent amount of interest in the retail, apparel, and footwear sectors, which I suppose makes sense.

[Sarah Gonzalez]

I.

[Wes Harrell]

The best rationale I can give is, I think that they were acutely impacted by these new tariffs.

[Sponsor/Advertiser]

Yeah.

[Wes Harrell]

And they were looking for the ability to raise cash immediately raise cash so

[Mary Childs]

they could go do normal corporate things with the cash they just got selling the tariff refund they may or may not have gotten in the future.

[Sarah Gonzalez]

Now, after today's Supreme Court ruling, the probability of refunds has gone way up, and these claims are now way more valuable. West says the prices have jumped. It's not at 20% anymore.

[Wes Harrell]

Price now is 40 is sort of where we're seeing bids shake out.

[Mary Childs]

Like hedge funds are buying the potential refund for 40% of what it will total if it happens.

[Wes Harrell]

Things are very much in flux. This decision was only just recently made. We're still trying to shake out where offerings are coming in. We're getting incomings from a number of different importers as we speak.

[Mary Childs]

That's still a discount of 60% because of what a mess it's going to be to try to get this refund and how long it will take. That's what the hedge funds are buying. All that complexity, the uncertainty, the headache for the potential payoff.

[Wes Harrell]

There really is no modern parallel for the magnitude of this unwind. And I just don't see the administration turning around in short order and immediately issuing refunds.

[Mary Childs]

Brett Kavanaugh summed it up as mess.

[Wes Harrell]

Yes, exactly. That's a great quote from today after the break.

[Sarah Gonzalez]

Today, President Trump added new tariffs and we'll tell you.

[Mary Childs]

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[Jeff Guo]

So this big Supreme Court decision, it didn't get rid of all of Trump's tariffs, just the big sweeping ones he tried to create using ieepa.

[Mary Childs]

But there are other laws that give the president the power to create tariffs. Kathleen Claussen, our trade law professor, ra through a whole list of them with us last time she was on the show.

[Kathleen Claussen]

Most of these statutes go by their three digits.

[Sarah Gonzalez]

So if you want to sound cool

[Kathleen Claussen]

in trade world, you have to start talking in three digits, right? Section 301, section 232, section 201, the list goes on.

[Jeff Guo]

So these laws, they were mostly created during the Cold War to give the President economic powers to, you know, deal with all that Cold War stuff. But for decades, through the 90s and 2000s, they weren't really used that much

[Kathleen Claussen]

because we had become a member of the World Trade Organization. We were committed to lowering tariffs. We were not interested in raising tariffs. And so it's only since Trump won, then they experienced this renaissance.

[Jeff Guo]

After Trump was elected for his first term, he started using some of these three digit laws, mostly Section 301 and Section 232, to create new tariffs. The Supreme Court's latest decision doesn't touch any of the tariffs created under those three digit laws.

[Mary Childs]

For instance, right now we have a bunch of specific tariffs on some Chinese machinery and minerals and also footwear. Those tariffs were created under the Section 301 law. Those tariffs are still in place.

[Jeff Guo]

But if you are a president who loves sweeping tariffs, most of these three digit laws have a major limitation. Most of them only let you create specific targeted tariffs. For instance, Section 232 is all about protecting national security.

[Mary Childs]

And the process itself takes a while. There's gotta be a report, just a lot of administrative work. The appeal of creating tariffs using IIPA was that the process would be much faster.

[Jeff Guo]

So if the Supreme Court would let the President use IIPA like he wanted to use it, he could create a bunch of tariffs with just the stroke of his pen. And now it seems like there really isn't any law that would give him that kind of power.

[Mary Childs]

Or is there? At this press conference on Friday, Trump announced a new across the board, 10% tariff under a different law with a different three digit number.

[Jeff Guo]

He said section 122?

[Kathleen Claussen]

Yes.

[Jeff Guo]

So what, what is going on there?

[Kathleen Claussen]

That's the big news of the day.

[Jeff Guo]

Kathleen says, yeah, welcome to section 122.

[Kathleen Claussen]

It allows the President to impose a tariff of up to 15% for a limited period of time to address a balance of payments deficit.

[Mary Childs]

She says this is another one of those economic laws written during the Cold War. And unlike some of the other three digit laws, Kathleen says section 122 in theory lets the President create a lot of tariffs really fast.

[Jeff Guo]

Has a president ever used section 122 to make tariffs?

[Kathleen Claussen]

No. No president has before.

[Jeff Guo]

Never.

[Kathleen Claussen]

That has never been done before.

[Jeff Guo]

But Kathleen says a lot of trade law professors have been expecting Trump to turn to this section 122 law at some point. And there is a big caveat here, which is that tariffs created under section 122 they are supposed to expire after 150 days.

[Kathleen Claussen]

And the statute says that Congress can extend that period. So it does throw it back to Congress. But I would quickly say that I think has not been used. So we haven't. We don't have any test case yet.

[Mary Childs]

Like, what if after the 150 days are up, the President just does it again, makes another 10% tariff that lasts another 150 days? Kathleen says, yeah, there's gonna be lawsuits to come over the new 10% tariff.

[Jeff Guo]

Sounds like law professors have already kind of had hypothetical fights about this hypothetical use of this law.

[Kathleen Claussen]

That's what we do best, Jeff.

[Jeff Guo]

Now for Kara Dyer, the business owner from earlier, who, by the way, sells toys, all of this tariff whiplash, it is so exhausting to think about.

[Sarah Gonzalez]

Yeah. And the last time we talked to Cara, which was in the midst of the sort of roller coaster of tariffs on China last summer, she was on the fence about whether or not she was going to be able to afford to put in large orders of toys because she didn't know if she'd be able to afford the tariffs on those orders.

[Jeff Guo]

And she was hopeful that maybe China or the Chinese manufacturers she worked with would help chip in.

[Sarah Gonzalez]

I remember at one point you were like, maybe China will, like, share in the cost of the tariffs. Did that not happen?

[Kara Dyer]

No.

[Sarah Gonzalez]

Yeah.

[Kara Dyer]

Not at all. Not at all. They were willing to do things that were, like, probably not legal, like, you know, put us in a big container with lots of other items and not reported, or say that our inventory wasn't worth as much as it was. Those were the kinds of things that were sort of offered to us. And we didn't really take any. Take them up on that because.

[Sarah Gonzalez]

Right.

[Kara Dyer]

Yeah. Tempting, but super risky. Right.

[Sarah Gonzalez]

So it was like the factories in China that would say, like, we'll just say that there's only 200 dolls in that container, not 500.

[Kara Dyer]

Yeah. But I didn't feel comfortable with it. So we never did anything like that. Wow.

[Jeff Guo]

Cara ended up switching suppliers. But beyond that, Cara changed up her whole business, actually. She didn't order any large shipments because tariffs were so high and unpredictable that she thought they'd put her out of business.

[Kara Dyer]

We did pull back. We didn't place any other large orders this past year, and instead we focused on developing new products and testing them out.

[Sarah Gonzalez]

Cara instead decided to have, like, a testing year to just develop new products and not necessarily import them. So she designed this little Red Riding Hood storybook, she calls them. Her company is called Storytime Toys. Kids can read a fairy tale and then play in that fairy tale world that they build. They're like these little sets.

[Kara Dyer]

Red Riding Hood can go through the woods and get to her grandmother's house, and the wolf can put the grandmother inside a little, you know, a little omoir to hide her. And so there's lots of fun things about that set.

[Jeff Guo]

And when Kara tested out this set during her testing year, it did pretty well with customers. So before the Supreme Court decision, Kara had actually decided to finally put in an order for a big container full of these storybooks. It's her first big container since the tariffs first went into effect.

[Kara Dyer]

That was 12,000 products. So we probably would have had to pay about $15,000 and. And tariff on that.

[Sarah Gonzalez]

And now it's just gone.

[Kara Dyer]

Gone. Yes, yes. I mean, that's such a huge relief and cost savings.

[Sarah Gonzalez]

Except it may not actually be the end of tariffs, though. And she knows this.

[Kara Dyer]

I've just sort of been following along with the news and you know what the administration has been saying in response to this, like, oh, well, we'll find another way. So I don't. I just don't know. I don't know if it's the end of tariffs or not. I'm just. Today I want to feel hopeful about it.

[Jeff Guo]

But of course, the roller coaster is not over. Trump already announced today that new 10% tariff. And Kara, she is just pretty frustrated that she's had to reimagine her whole business because of tariffs.

[Kara Dyer]

Rethink our strategy, rethink our finances. Definitely. I feel angry about that, especially when it really felt like just while it was going on, you didn't see any reason for it. Were we getting a better deal from China, you know, because we did this? No.

[Sarah Gonzalez]

In all, Cara says she only paid about $20,000 in tariffs because she scaled back on orders. So not a ton.

[Kara Dyer]

But that $20,000 for a small business is. That's, that's pretty significant.

[Jeff Guo]

And she does plan to try to apply for a refund, but I don't know.

[Kara Dyer]

I mean, if I have to hire a lawyer, I'll have to weigh the cost of that compared to how much I would potentially get back. But, I mean, if there are illegal tariffs, we need that money back so that we can invest it in growing our business and operating our business.

[Jeff Guo]

Hey, you want to see Planet Money in person on our book tour? It's in April. We're going coast to coast.

[Mary Childs]

[e-mail] this episode was produced by Sam Yellow Horse Kessler and Willa Rubin. It was edited by Marianne McCune. It was fact checked by Ciera Juarez. Alex Goldmark is our executive producer. Thank you to Eliza Ronald Hannan for some great reporting at Bloomberg on the tariff rebate trading. And to Martha Gimbel at the Yale Budget Lab. I'm Mary Childs.

[Sarah Gonzalez]

I'm Sarah Gonzalez.

[Jeff Guo]

And I'm Jeff Woe. This is npr. Thanks for listening.

[Sponsor/Advertiser]

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