Supreme Court Strikes Down IEEPA Tariffs: Transfer Pricing Implications | Podcast

In this episode, Josh Finfrock examines the Supreme Court’s recent IEEPA decision and its implications for tariff authority, potential refund opportunities and transfer pricing strategies. He breaks down how the ruling limits executive power to impose unilateral tariffs, what importers should prepare for as they pursue potential refunds through the customs process and why these changes may require reassessing existing transfer pricing policies. This conversation offers a clear, practical overview for businesses navigating the intersection of tariffs, customs requirements, income tax considerations and transfer pricing.

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Detailed Description of Supreme Court Strikes Down IEEPA Tariffs: Transfer Pricing Implications

00:00:00
Josh: Hi, I am Josh Finfrock. I lead the transfer pricing practice at Weaver. Today, we are going to talk about another transfer pricing topic, but really more of a parallel with a Customs and Border Protection tariff-related topic.

00:00:13
Josh: The Supreme Court announced its IEEPA decision, so the International Emergency Economic Powers Act — which has been the key basis for the current administration’s ability to impose tariffs on companies importing goods into the United States on a unilateral basis at the executive level — which is different than the Section 232 or 301s and these other tariffs that have come through the traditional means and congressional process.

00:00:42
Josh: So, what does this mean that the Supreme Court has struck this down? The key issue really highlighted in the initial parts of the opinion from the Supreme Court really get into the difference between the emergency authorization to regulate versus raising revenue that regulating importation does not necessarily equate to raising revenue, like tariffs or the power to tax.

00:01:08
Josh: That power to raise revenue still resides with Congress, per the opinion. As a result, that strikes down the IEEPA tariffs. So, what is that going to put us in a position of?

00:01:20
Josh: Well, companies that have not filed suit or protests through the customs process are going to need to start their kind of administrative and legal process towards getting those refunds and that will be a fairly complicated process for some, but it would be anticipated that most of these IEEPA reciprocal-type tariffs and these types of things that were put in place in the last year by executive order will now be refundable.

00:01:49
Josh: So, where is the transfer pricing tie-in? Well, where companies have needed to adjust their transfer pricing policies to accommodate for what has happened in the marketplace, which for some companies was a very significant impact related to tariffs.

00:02:05
Josh: If they are going to go get those refunded now, we may need to revisit some of those transfer pricing methodologies and how that plays through the system. So, what the income tax implications were as opposed to just the tariff implications.

00:02:20
Josh: So, of course, finally on this topic, it is probably not a completely settled topic. While the IEEPA Act will not support the tariffs that have been put in place, Trump has already come out, prior and in reaction, saying there are other ways to put tariffs in place.

00:02:40
Josh: So, it is something we will keep an eye on and anticipate continuing to follow the news on.

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