U.S. President Donald Trump is already planning new tariffs to replace the ones the U.S. Supreme Court struck down on Friday.
Friday’s Supreme Court ruling found that Trump overstepped his authority to impose double-digit duties sets the stage for another round of uncertainty for shoe firms. And, as expected, Trump quickly retaliated with plans to sign an executive order that would impose a global 10 percent tariff.
The big difference from the reciprocal tariffs struck down under IEEPA (International Emergency Economic Powers Act) is that the new one under Section 122 of the Trade Act of 1974 is only good for 150 days. It is named after a provision in the trade law that allows Trump to levy duties of up to 15 percent to correct “large and serious” U.S. trade deficits. The tariffs could continue after 150 days, but only if approved by Congress.
Trump said on Friday that the new tariffs could go into effect “three days from now,” telling reporters that he’s also looking at Section 301 of the Trade Act of 1974, which allows the U.S. Trade Representative to impose additional duties on Chinese imports because of unfair trade practices. Duties under Section 301 are for four years, but could be extended indefinitely on request every four years.
Jefferies retail analyst Corey Tarlowe said the good news from the Supreme Court ruling is that it makes “future tariff actions narrower, slower, and more legally constrained.”
Tarlowe’s colleague Randal Konik sees the ruling as a “clear positive” for consumer discretionary firms that have high import exposure. He said the ruling is beneficial to Nike, whose fiscal year 2026 guidance included a $1.5 billion cost headwind, or 320 basis points of gross margin pressure, that now becomes a margin headwind. Another shoe firm benefitting from the ruling is Birkenstock, which faced a 100 basis point headwind to both gross margin and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margins that now turns into a tailwind driving margin upside and potential outperformance versus current guidance.
Konik also said that the invalidates the “25 percent Canada/Mexico tariffs, the 10 percent to 145 percent China tariffs and the broader ‘reciprocal’ tariff regime,” although it raises new questions around remedies, such as whether companies will be entitled to refunds for duties already paid.
Needham’s Tom Nikic said Steve Madden also stands to benefit from the Supreme Court ruling. While the shoe firm has a heavy exposure to tariffs, its private label business at mass discounters Walmart and Target raised the concern before the Supreme Court’s decision that the low-margin goods made it no longer worthwhile for retailers to invest in the product categories. Madden’s private label business has been estimated at down 20 percent in 2025.
RG Barry CEO Bob Mullaney said that while the Supreme Court’s decision is meaningful, it doesn’t “provide clarity on what comes next.”
One aspect of the Supreme Court decision that wasn’t addressed was the lack of any guidance or decision on refunds for duties already paid by American importers. Supreme Court Justice Brett Kavanaugh in his dissent called the process of issuing refunds — believed to be in the billions — paid by importers a “mess,” noting too the consequences for the U.S. Treasury.
Economists at Wells Fargo Securities noted that because the ruling does not trigger automatic refunds, importers must pursue refunds individually through established claims processes.
“Roughly $264 billion in tariff revenue was collected last year, and we estimate about half — around $130 billion — was collected under IEEPA,” the economists noted, adding that while the true total may be somewhat higher once the January and February collections are included, the “refunds will be handled case by case, meaning not all IEEPA tariff revenue is likely to be returned.”
Also of concern is the economists’ belief that any refunds will arrive gradually, trickling in over months, and maybe years, and probably delivered directly to the importers who originally paid the tariffs.
“It remains unclear whether refunds will be issued or how policy will ultimately unfold. What businesses need most is stability and predictability,” Mullaney said.
Rick Helfenbein, an independent consultant and former chairman, president and chief executive officer of the American Apparel and Footwear Association (AAFA), expects that trade deals formed under IEEPA will stay in place, although the actual tariff percent rate may change.
“Refunds will be quite an interesting process, given the separation between the role of importers, retailers, and consumers. Hard to say who will get the refund but, at the end of the day, expect that wholesale prices could drop and that alone should have a positive effect on the nation’s economy and the health of the retail community,” Helfenbein said.
Current AAFA president and chief executive officer Steve Lamar said: “We are confident in Customs and Border Protection’s (CBP’s) ability to move quickly and provide clear guidance to American businesses on how to obtain refunds for tariffs that were unlawfully collected. CBP’s recently modernized, fully electronic refund process should help to expedite this effort.”
Lamar also urged the Trump Administration to work with Congress and the “full ranges of stakeholders” representing American businesses when considering any future tariff actions, calling for the restoration of a predictable and dependable trade policy in compliance with the rule of law that the apparel and footwear industry can rely on to “temper the already heavy tariff burden facing our industry.”
