Trade court strikes down Trump’s 10% universal tariffs, easing cost pressures for tech importers

A federal trade court has invalidated former President Donald Trump’s 10% universal tariffs on imported goods, ruling that the duties violated the scope of executive authority under the International Emergency Economic Powers Act (IEEPA). The decision, issued this week by the U.S. Court of International Trade, orders the immediate lifting of the tariffs and makes importers eligible to file for refunds of duties paid since the tariffs took effect.

The tariffs, first imposed in 2018, applied to all goods imported from every U.S. trading partner, marking an unprecedented expansion of executive trade powers. Trump administration officials argued the duties were necessary to address persistent U.S. trade deficits and protect domestic industries from unfair foreign competition, citing a national emergency tied to trade imbalances. The Court of International Trade rejected that argument, writing in its decision that IEEPA does not grant the president authority to impose tariffs of universal scope without explicit Congressional approval.

For the technology sector, the ruling removes a major source of cost uncertainty that has persisted for six years. U.S. tech firms import more than $500 billion in electrical machinery and equipment annually, per data from the U.S. Census Bureau, a category that includes semiconductors, smartphones, laptops, and server hardware. A 10% tariff on these imports would have added more than $50 billion in annual costs for the industry, expenses that are typically either passed to consumers as higher prices or absorbed as reduced profit margins.

Apple, which assembles the majority of its iPhones and other hardware in China, paid an estimated $1.5 billion in tariffs on Chinese imports in 2022 alone, according to company regulatory filings. The company had previously warned that broader universal tariffs would force it to raise prices on consumer devices or shift more production to higher-cost regions, a move that would reduce annual profits by as much as 5%. Under the court’s ruling, Apple and other importers can now file for refunds of all tariffs paid under the universal duty program, a process that could return billions of dollars to tech firms’ balance sheets over the next 12 months.

The decision also halts a wave of supply chain restructuring that had cost the tech industry billions of dollars. Dell, HP, and Lenovo all shifted portions of their laptop production from China to Vietnam, India, and Mexico to avoid existing country-specific tariffs, a process that added $200 million to $300 million in annual costs for each firm, per earnings call disclosures. With universal tariffs now struck down, these companies can optimize production based on efficiency and cost rather than trade policy, reversing some of the more expensive supply chain shifts made in recent years.

Legal experts say the ruling sets a significant precedent for the division of trade powers between the executive and legislative branches. For decades, presidents have relied on IEEPA to impose targeted tariffs, but the Trump administration’s expansion to universal duties pushed the limits of that authority. The decision could limit future presidents from imposing broad trade penalties without Congressional approval, a shift that tech industry lobbyists have long advocated for to reduce policy uncertainty.

The Trump campaign has indicated it will appeal the ruling to the U.S. Court of Appeals for the Federal Circuit, with a potential Supreme Court review if the appeal fails. For now, tech companies are moving to file refund claims and adjust supply chain plans, with analysts estimating the ruling will boost aggregate tech sector earnings by 1.2% in the next fiscal year. Semiconductor Industry Association president John Neuffer said in a statement that the decision "provides much-needed certainty for an industry that relies on open, rules-based trade to deliver critical technologies to global markets."