Local businesses respond to tariff decision

MENOMINEE, MICH. – On Feb. 20, the U.S. Supreme Court struck down President Donald Trump’s authority to impose tariffs under the International Emergency Economic Powers Act, but the decision won’t end all tariffs.

Following this, Trump imposed a new 10% global tariff using Section 122 of the Trade Act of 1974. The act authorizes the president to address United States’ balance-of-payment deficits through “surcharges and import restrictions,” according to Trump’s Feb. 20 proclamation.

Trump also is considering imposing other tariffs as “relief from unfair trade practices,” using Title III of the Trade Act of 1974, also called Section 301.

In 2018, the Trump Administration imposed tariffs on imports from China, which remain in effect, according to a government website. Investigations, which can take months, determine whether the foreign country’s restriction on U.S. commerce rises to the statute’s required level of “discriminatory practices.”

Trump’s proclamations coincided with his executive order stating “in light of recent events,’’ additional ad valorem duties imposed under the International Emergency Economic Powers Act will no longer be collected.

The same day, the nation’s highest court had ruled in favor of plaintiffs who brought the tariff case — Vernon Hills, Illinois-based educational toy marketer Learning Resources Inc., and V.O.S. Selections, a small New York importer of wine and spirits, according to CNN.

The plaintiffs contended the tariffs imposed a burden for them as their businesses rely on foreign-made products or manufacturing.

Other U.S. manufacturers who regard tariffs as beneficial to their domestic businesses were disappointed in the court’s decision.

At Component Solutions’ production and sales department in Menominee, Mich., David Fischer said the tariffs have helped sales. The company is hiring more workers to keep up with demand.

“We’re looking for more people. We’re growing,” he said.

Component Solutions sells lumber and parts to other companies that make cabinets and windows, such as Home Depot, Menards and Lowe’s, he said. Most of his customers are located in Wisconsin and Michigan, he said, though he also sells globally.

The Supreme Court decision might not affect all wood tariffs, as some were imposed under a different statute. The tariffs aimed to help domestic companies better compete for customers, Fischer said.

“When they put the tariffs on, business did increase,” he said.

“It just kept getting a little bit better through last year.”

Tariffs on wood products took effect last fall, including a 10% ad valorem duty on softwood and lumber and 25% duties on kitchen cabinets, vanities, various components and upholstered wooden products, Fischer said. Some wood tariffs were imposed under section 232 of the Trade Expansion Act of 1962, as amended, as well as section 301 of the Trade Act of 1974. These will continue, according to Trump’s executive order.

Before Trump imposed the wood tariffs in 2025, the rise of foreign manufacturing created an unlevel playing field for small domestic companies, Fischer said. With labor costs lower in some foreign countries, it became more difficult to compete.

For Learning Resources, which manufactures its educational toys in China, Trump’s tariffs increased the company’s costs.

Chief executive Rick Woldenberg told the Associated Press last year when Trump imposed a 154% tariff on goods manufactured in China, he estimated it would cost the company $100.2 million.

In New York, Victor Schwartz, chief executive officer of V.O.S. Selections, estimated the tariffs resulted in “six figures” in new costs for the wine and spirits importer, CNN reported.
The Learning Resources and V.O.S. Selections case against tariffs landed at the U.S. Supreme Court with the question, “Does the International Emergency Economic Powers Act (IEEPA) authorize the president to impose tariffs?”

The answer was subject to the high court’s interpretation of the act’s language.

Five justices joined Chief Justice John Roberts who wrote the majority opinion and took a literal approach to interpreting the economic powers act, emphasizing it doesn’t include the word “tariff.”

“When Congress has delegated its tariff powers, it has done so in explicit terms and subject to strict limits,” Roberts said.

While the act gives the executive branch authority to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit importation or exportation,” Roberts pointed out the list doesn’t mention tariffs.

“That omission is notable in light of the significant but specific powers Congress did go to the trouble of naming,” he said in the opinion.

If Congress wanted the act to give the president the authority to impose tariffs, “it would have done so expressly,” he said.

As a result, the Trump Administration’s contention that the statute granted the president the authority to impose tariffs was incorrect, the majority said.

In disagreeing with the majority, dissenting Justices Brett Kavanaugh noted Congress authorized the executive branch to “regulate importation” in U.S. Code 50 1702(a)(1)(B).
“Throughout American history, the authority to ‘regulate importation’ has been understood to include the authority to impose duties on imports.” Those duties are a form of tariff, they said. Justices Clarence Thomas and Samuel Alito also dissented.

Kavanaugh also provided examples of when earlier presidents had authority to impose tariffs under the Trading with the Enemy Act of 1917, which would later transform into the International Emergency Economic Powers Act (IEEPA) in 1977.

In Menominee, Fischer said Trump’s tariffs on wood products made sense to him.

“They brought a lot of business back to the United States,” he said. “That doesn’t happen overnight.”