ONCE upon a time, there was hope that the world was working towards a rule‑based, multilateral trading system in which customs tariffs on imported goods were being reduced as part of trade liberalisation.
That sense of relative calm has been overridden, in part, by the commencement of the second Trump administration and, in part, by various armed conflicts. The second Trump administration has subsequently adopted an extended suite of tariff and other measures, the process of which is summarised below.
These ‘reciprocal’ or ‘Liberation Day’ tariffs were imposed on 2 April 2025 by President Trump pursuant to the United States (US) International Emergency Economic Powers Act (IEEPA). However, following several earlier reviews, the IEEPA tariffs were expedited for review by the Supreme Court of the United States (SCOTUS).
On 1 April 2026, SCOTUS ruled (by a 6 to 3 majority) that the IEEPA did not authorise the President to impose tariffs. Following that ruling, the Trump administration terminated all tariffs implemented under the IEEPA and moved to a 10% global tariff under Section 122 of the Trade Act 1974 (Trade Act), which is discussed further below.
The decision did not affect the ‘Section 232’ and ‘Section 301’ tariffs (also discussed below).
A further significant issue arising from the SCOTUS decision is that it directed all amounts paid under the IEEPA tariffs be refunded, together with interest. However, that direction has proved difficult to implement and steps are being taken by US Customs and Border Protection (USCBP) to include refund applications in its ‘Automated Commercial Environment’ (ACE) portal through the ‘Consolidated Administration and Processing of Entries’ (CAPE) system.
At this stage, the actual payment of refunds appears to depend on whether the amounts are ‘Unliquidated’ or ‘Non‑Final’, or whether they are ‘Finally Liquidated’. This status depends on whether the amounts have been fully processed through the USCBP’s ‘mass adjustment’ process in ACE following their original payment, or are yet to be processed.
Payment of ‘Finally Liquidated’ amounts is currently the subject of litigation. The US government claims refunds cannot be accessed through the CAPE system in ACE and would instead require separate litigation by each importer before the Court of International Trade (CIT) to obtain an order for payment and associated interest.
Immediately following the termination of the IEEPA tariffs, the US implemented a 10% global tariff under Section 122 of the Trade Act, effective from 24 February 2026 for a period of 150 days (until 24 July 2026). This provision allows the President to impose tariffs of up to 15% for a maximum of 150 days to address ‘international payments problems’. The Trump administration justified the tariffs on the basis of alleged balance‑of‑payments and current account deficits.
The tariffs expire after 150 days unless Congress votes to continue them. The current tariff rate on imports of Australian goods is 10%. The Section 122 tariffs have been subject to external review on the basis that no such ‘international payments problems’ exist. While the CIT initially ruled the tariffs unlawful, the US Court of Appeals granted an application for a stay on the CIT finding pending an appeal by the Trump administration to retain the tariffs. The appeal has yet to be heard, so the 10% tariff remains in place (subject to exemptions or further court decisions).
It is believed the Trump administration may allow the Section 122 tariffs to lapse after 150 days.
On 2 February 2026, the US announced the commencement of an investigation under Section 301 of the Trade Act by the United States Trade Representative (USTR) to investigate and impose measures (usually tariffs) against countries which have engaged in ‘unfair or discriminatory trade practices’.
In this case, it is alleged that 60 countries (including Australia) have failed to take adequate action to prevent the import of goods that are the subject of forced labour. On 3 June 2026, the USTR proposed tariffs of 12.5% on Australian imports into the US as Australia had not taken such adequate actions. Further submissions and public hearings are scheduled for early July 2026 before any tariffs are finalised.
Some exemptions are in place. It is not yet known when the investigation will conclude or whether tariffs will ultimately be imposed.
Section 232 of the Trade Expansion Act of 1962 authorises the US President to adjust tariffs on imports of materials which are deemed to threaten national security.
Tariffs introduced during the first Trump administration were retained by the Biden administration. Previous exemptions for Australian products have now been removed by the second Trump administration.
Certain Australian products are now subject to these tariffs, including:
On 2 April 2026, the US also announced a 100% tariff on certain pharmaceuticals and pharmaceutical ingredients. While exemptions apply to many products, they do not extend to generic pharmaceuticals and certain other pharmaceuticals, such as blood plasma‑derived therapies, which currently account for around 90% of Australian exports.
The expected commencement date for these pharmaceutical tariffs is 29 September 2026.
Previously, the US exempted consignments valued below US$800 from tariffs and comprehensive review by USCBP.
This ‘de minimis’ exemption was removed on 29 August 2025. All imported packages, regardless of value, are now subject to formal or informal customs duty and assessed import duties, taxes and fees.
Australia’s Free Trade Agreement (FTA) with the US remains in place. However, like most FTAs, countries agreement to reduce or remove tariffs is subject to exceptions which allow the parties to impose tariffs in certain circumstances. This allows for the US to impose dumping and countervailing tariffs on goods from Australia. It also allows for the imposition of tariffs where economic or national security is perceived to be at risk.
Australia retains similar rights under its own FTAs. For example, many dumping and countervailing investigations take place in relation to goods from countries with which we have FTAs (China being in the forefront).
For Australian parties dealing with the US:
The situation remains highly fluid. New or revised tariffs could be applied to Australian goods entering the US pursuant to one of the sections described above or pursuant to another mechanism that does not require US Congressional approval and can be initiated by Presidential use of Executive Order or other means.
The US could also initiate a new section 301 investigations against Australian goods or exporters.
In short, uncertainty continues to create a challenging environment to conduct business and plan for future business.
Those dealing with the US in any capacity should consider:
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