After the Ruling

Ways the Supreme Court’s tariff decision impacts the gear industry

Editor's note, March 9: The refund section of this article has been updated to reflect the March 4 Court of International Trade ruling and CBP's response. See "Refunds" below.

In March, when we published “Farewell to an Idea,” the gear industry was bracing for the full weight of Section 232 tariffs—25 percent on steel and aluminum, no more exclusion process, no more relief valves. The Supreme Court case challenging the president’s broader IEEPA tariffs was still months from oral argument. The question then was how to survive. The question now is different.

On February 20, the Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. The decision invalidated the sweeping “reciprocal” tariffs on nearly every U.S. trading partner, along with the fentanyl-related tariffs on China, Canada, and Mexico. The Court held that IEEPA’s authority to “regulate importation” does not include the power to tax.

In dissent, Justice Kavanaugh predicted the ruling “might not substantially constrain a President’s ability to order tariffs going forward,” pointing to several alternative statutes. The administration proved him right within hours.

The New Tariff Stack

As of February 24, CBP stopped collecting IEEPA tariffs. What remains—and what replaced them—defines the gear industry’s new cost structure.

Section 232

The Section 232 tariffs on steel, aluminum, and copper are unchanged at 50 percent. Over 400 derivative product categories added in 2025 also remain in force. This is the tariff that dominates for gear manufacturers. Raw steel—billet, bar, rod, forging stock—and products classified in HTS Chapters 72 and 73 are assessed on total value. For derivative products classified outside those chapters, the tariff applies only to the steel or aluminum content, with the importer responsible for documenting that content.

Critically for this industry: several HTS 8483 codes covering gear boxes, transmission shafts, gears, gearing, and gear parts were added to the Section 232 derivative list in August 2025. Imported gear products classified under those codes are subject to the tariff on their steel content. The exclusion process and all general approved exclusions remain revoked.

Section 122

Within hours of the ruling, President Trump imposed a global surcharge under Section 122 of the Trade Act of 1974, raised to the statutory maximum of 15 percent on February 22. It took effect February 24 and expires July 24, 2026. Section 122 does not stack on Section 232—products already fully covered by Section 232 are excluded. For derivative products where only part of the value falls under Section 232, Section 122 applies to the non-steel, non-aluminum portion. USMCA-qualifying goods from Canada and Mexico are also exempt.

Section 301

Existing Section 301 duties on Chinese goods remain. The administration has announced new investigations that could produce additional country-specific tariffs, but those take months.

What’s Gone

The IEEPA reciprocal tariffs (10–34 percent on most countries, up to 145 percent on China), the fentanyl surcharges, and all country-specific escalations are struck down and terminated. For a gear manufacturer importing 20MnCr5 carburizing steel from Germany or 9310 aerospace-grade material from Japan, the IEEPA layer is eliminated. Section 232 on those steel imports remains.

Where Relief Lands and Where It Doesn’t

Automotive

The auto sector carries its own Section 232 tariffs—25 percent on vehicles and certain parts—excluded from Section 122. The IEEPA overlay on imported tooling and non-USMCA components is gone. For gear manufacturers supplying transmission components, differential gears, and EV reduction drives, the clearest savings come on non-steel inputs: electronics, sensors, and rare earth magnets, which now face Section 122 rather than the higher IEEPA rates. USMCA-qualifying goods from Canada and Mexico are exempt entirely.

Aerospace and Defense

Gears for jet engines, turbines, and landing gear rely on Inconel, Hastelloy, maraging steels, and 9310 aircraft-quality alloy—often sourced from mills in Japan, Germany, and the UK. Many of these nickel-base superalloys and titanium alloys fall outside the steel and aluminum HTS chapters and may not carry Section 232 duties. Those materials face Section 122 until July 24—and potentially nothing after. Civil aircraft parts are specifically excluded from Section 122. Aerospace gear manufacturers should audit their HTS classifications now.

Wind, Industrial, and Mining

These sectors are the most steel-intensive and see the least relief. Wind turbine gearbox forgings (4140, 4340), large castings for mining gears, and heavy-duty enclosed drive components are fully or predominantly steel by value—meaning Section 232 dominates and Section 122 adds little. Savings are limited to non-steel content in assemblies: housings, instrumentation, imported bearings.

The Machine Tool Window

This is where the ruling delivers the most actionable benefit for gear shops.

Gear-specific machine tools—hobbing, grinding, and shaping machines classified under HTS 8461—do not currently appear on the Section 232 derivative product list. (By contrast, machining centers under HTS 8457 were added in August 2025 and face Section 232 duties on their steel and aluminum content.) That distinction matters: a gear hobbing or grinding machine imported from Liebherr, Klingelnberg, Reishauer, Mitsubishi, or Nidec currently faces Section 122 but not the Section 232 derivative tariff.

Under the IEEPA tariffs, importing a $2 million gear grinding machine from Germany carried an additional 20 percent reciprocal duty—$400,000. The replacement: Section 122 at 15 percent, or $300,000. That’s $100,000 in immediate savings. And Section 122 expires July 24. If the administration does not add gear machine tools to the Section 232 derivative list before then, the cost drops further.

For shops that have been deferring capital investment—and the 2025 State of the Gear Industry survey showed many were—the period between now and late July may be the best buying window for imported gear machine tools since early 2025. But the Commerce Department’s derivative inclusion process opens three times a year, and domestic manufacturers have already petitioned to add machine tool codes. Anyone considering a purchase should move with urgency.

Chinese Competition

Under IEEPA, Chinese goods faced a 145 percent effective tariff—so high it functioned as a near-embargo on finished gears, blanks, and components. That cushion just narrowed sharply. Chinese gear imports now face Section 301 tariffs, the Section 122 surcharge, and Section 232 on steel content. The combined rate remains significant but is a fraction of the IEEPA-era total.

U.S. producers of commodity gearing—spur gears, worm gears, standard reducers—should watch this closely. The administration’s new Section 301 investigations may eventually restore some protection, but the gap between now and any new duties is when competitive pressure will be sharpest.

Refunds

Updated March 9, 2026.

The refund picture has moved faster than anyone expected. On March 4, Judge Richard K. Eaton of the Court of International Trade ordered CBP to refund IEEPA tariffs to all importers of record—not just the plaintiffs in the case. "All importers of record whose entries were subject to IEEPA duties are entitled to the benefit of the Learning Resources decision," Eaton wrote. The scope is enormous: CBP has collected approximately $166 billion in IEEPA duties across more than 53 million entries from over 330,000 importers.

CBP responded on March 6 that it cannot immediately comply. Its existing systems are not built for refunds at this scale. The agency is requesting 45 days—targeting mid-April—to build new functionality in its Automated Commercial Environment (ACE) system that would streamline refund processing on an importer-by-importer basis rather than issuing 53 million separate entry-specific refunds. The process, once operational, will require minimal submission from importers: file a declaration in ACE listing entries on which IEEPA duties were paid, and the system will run validations automatically.

There is one critical administrative hurdle. CBP now issues refunds only electronically via ACH. Of the 330,000-plus importers who paid IEEPA tariffs, only about 21,000 have completed the electronic setup process. Refunds will be rejected for importers who have not enrolled. If your company paid IEEPA duties, confirm your ACH enrollment in ACE now—before the refund system goes live.

In the meantime, the practical steps from our original guidance remain: organize entry summaries, duty payment records, and HTS classifications for every affected shipment. Verify which entries actually carried IEEPA charges versus Section 232 charges. And consult a trade attorney, particularly if you have entries that have already liquidated and may be past the 180-day protest window—the CIT's ruling appears to cover those entries, but the government may appeal.

What MPMA Is Doing

In direct response to the ruling, MPMA is hosting a webinar on March 11 at 1:00 PM ET: “The Future of U.S. Tariffs and Trade Policy after the Supreme Court’s Ruling.” The session, part of MPMA’s 2026 Trade Webinar Series, will be led by Nate Bolin, a partner at K&L Gates who has litigated more than 100 cases involving Section 232, Section 301, and customs law before the Court of International Trade and the Federal Circuit. Topics include the status of pending Section 301 cases on Brazil, China, and Chinese-built ships, the future of USMCA, and implementation of trade deals with the EU, Japan, Korea, India, Taiwan, and Malaysia.

AGMA and ABMA continue to maintain a dedicated Trade Policy and Tariff Updates page with analysis and economic forecasts. The 2026 MPMA Annual Meeting (April 23–25, Charlotte Harbor, Florida) will also address the shifting trade landscape.

The National Association of Manufacturers called the ruling a reminder that trade policy needs “clarity and durability,” urging that tariffs, if used, “should be targeted to countries engaged in specific unfair trade practices, particularly by nonmarket economies.” As John Cross, CEO of ASI Drives, told us in March: “The rapid succession of changes is difficult to manage, placing a disproportionate burden on small manufacturers.”

The July 24 Clock

Section 122 expires in five months. The administration must either let the surcharge lapse or complete new Section 232 and Section 301 investigations to build a durable replacement before that date. Here is the playbook between now and then:
•    Audit your HTS classifications. The boundary between Section 232 and Section 122 coverage depends on classification and steel/aluminum content valuation.
•    Renegotiate supplier contracts. Suppliers who raised prices to account for IEEPA duties should not retain that margin unchallenged.
•    Evaluate capital equipment purchases. Gear machines under HTS 8461 face Section 122 instead of the former IEEPA rates—and Section 122 expires July 24.
•    Preserve import records for refund claims. Separate Section 232 entries from IEEPA entries. Consult trade counsel.
•    Register for AGMA’s March 11 webinar. Register here.
The tariff landscape has shifted. It hasn’t settled. But for the first time in a year, the gear industry has room to plan—even if that room comes with a five-month expiration date.

https://www.agma.org/trade-policy-and-tariff/

References

The Supreme Court Decision

1. Learning Resources, Inc. v. Trump, No. 24–1287, 607 U.S. ___ (2026). Full opinion: https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf
2. Howe, Amy. "Supreme Court strikes down tariffs." SCOTUSblog, February 20, 2026. https://www.scotusblog.com/2026/02/supreme-court-strikes-down-tariffs/

Post-Ruling Analysis and Administration Response

3. "Fact Sheet: President Donald J. Trump Imposes a Temporary Import Duty to Address Fundamental International Payment Problems." The White House, February 20, 2026. https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-imposes-a-temporary-import-duty-to-address-fundamental-international-payment-problems/
4. "Supreme Court Trump Tariffs Ruling: Analysis." Tax Foundation, February 20, 2026. https://taxfoundation.org/blog/supreme-court-trump-tariffs-ruling/
5. "Supreme Court Strikes Down IEEPA Tariffs—What Now?" WilmerHale, February 20, 2026. https://www.wilmerhale.com/en/insights/client-alerts/20260220-supreme-court-strikes-down-ieepa-tariffs-what-now
6. "Supreme Court Strikes Down IEEPA Tariffs—Key Takeaways and Implications for Importers." Ropes & Gray LLP, February 27, 2026. https://www.ropesgray.com/en/insights/alerts/2026/02/supreme-court-strikes-down-ieepa-tariffs-key-takeaways-and-implications-for-importers
7. "After the Supreme Court Ruling, What Is Next for Trump's Tariffs?" Council on Foreign Relations, February 22, 2026. https://www.cfr.org/articles/after-the-supreme-court-ruling-what-is-next-for-trumps-tariffs
8. "How Trump's Tariffs Could Survive the Supreme Court Ruling." Council on Foreign Relations, February 20, 2026. https://www.cfr.org/articles/how-trumps-tariffs-could-survive-the-supreme-court-ruling
9. "Section 122 in effect: what the US tariff regime looks like now." Global Trade Alert, February 2026. https://globaltradealert.org/reports/S122-US-Tariff-Estimates
10. "From IEEPA to Section 122: What Changed on 20 February 2026." Global Trade Alert, February 2026. https://globaltradealert.org/blog/from-ieepa-to-section-122
11. "What Every Multinational Should Know About the New Section 122 Tariffs and Preserving IEEPA Refund Rights." Foley & Lardner LLP, February 2026. https://www.foley.com/insights/publications/2026/02/what-every-multinational-should-know-about-the-new-section-122-tariffs-and-preserving-ieepa-refund-rights/
12. "Tariffs Redux: What Importers Should Know About IEEPA Refunds and Section 122." Snell & Wilmer, February 2026. https://www.swlaw.com/publication/tariffs-redux-what-importers-should-know-about-ieepa-refunds-and-section-122/
13. "Trump tariffs: After Supreme Court ruling, industries still face higher rates." CNBC, February 20, 2026. https://www.cnbc.com/2026/02/20/trump-tariffs-supreme-court-ruling-industry-higher-rates.html
14. "7 key things to know about Trump's tariffs after the Supreme Court decision." NPR, February 20, 2026. https://www.npr.org/2026/02/20/nx-s1-5677609/tariffs-economy-trump-supreme-court
15. "Manufacturers look for certainty following Supreme Court's tariff decision." Manufacturing Dive, February 23, 2026. https://www.manufacturingdive.com/news/manufacturers-stress-certainty-supreme-court-ruling-trump-tariffs/812835/
16. "Manufacturers call for clear, consistent trade framework." Washington Times, February 23, 2026. https://www.washingtontimes.com/news/2026/feb/23/manufacturers-call-clear-consistent-trade-framework/

Section 232 Tariffs, Derivatives, and HTS Classifications

17. "Section 232 Tariffs on Steel and Aluminum Frequently Asked Questions." U.S. Customs and Border Protection. https://www.cbp.gov/trade/programs-administration/entry-summary/232-tariffs-aluminum-and-steel-faqs
18. "Adoption and Procedures of the Section 232 Steel and Aluminum Tariff Inclusions Process." Federal Register, August 19, 2025. https://www.federalregister.gov/documents/2025/08/19/2025-15819/adoption-and-procedures-of-the-section-232-steel-and-aluminum-tariff-inclusions-process
19. "US Commerce Adds 428 HTS Codes to Section 232 Steel and Aluminum Tariff List." ArentFox Schiff, August 21, 2025. https://www.afslaw.com/perspectives/customs-import-compliance-blog/us-commerce-adds-428-hts-codes-section-232-steel-and
20. "Section 232 Tariffs and Trade 2025: What AMT Members Need To Know." Association for Manufacturing Technology. https://www.amtonline.org/article/sec-232-tariffs-and-trade-2025-what-amt-members-need-to-know
21. "Section 232 Inclusion Requests Cover Tens of Billions in Imports." International Trade Today, May 21, 2025. https://internationaltradetoday.com/article/2025/05/21/section-232-inclusion-requests-cover-tens-of-billions-in-imports-2505210035
22. "Supply Chains to Face Global Impact From US Tariffs on Steel and Aluminum." Baker Botts, March 2025. https://www.bakerbotts.com/thought-leadership/publications/2025/march/supply-chains-to-face-global-impact-from-us-tariffs-on-steel-and-aluminum

Gear Industry and Manufacturing Impact

23. Fagan, Aaron. "Farewell to an Idea." Gear Technology, March/April 2025. https://www.geartechnology.com/farewell-to-an-idea
24. "2025 State of the Gear Industry." Gear Technology, January/February 2025. https://www.geartechnology.com/2025-state-of-the-gear-industry
25. "Trade Policy and Tariff Updates." American Gear Manufacturers Association. https://www.agma.org/trade-policy-and-tariff/
26. "The Future of U.S. Tariffs and Trade Policy after the Supreme Court's Ruling." AGMA webinar, March 11, 2026. https://www.agma.org/event/the-future-of-u-s-tariffs-and-trade-policy-after-the-supreme-courts-ruling/
27. "2026 MPMA Annual Meeting." American Gear Manufacturers Association. https://www.agma.org/event/2026-mpma-annual-meeting/
28. "Tariffs impact U.S. industries differently, with manufacturing the most exposed." Washington Center for Equitable Growth, July 29, 2025. https://equitablegrowth.org/tariffs-impact-u-s-industries-differently-with-manufacturing-the-most-exposed/
29. "The 2025 Tariffs Have Hurt U.S. Manufacturing, Employment, and Consumers." ORF America, December 10, 2025. https://orfamerica.org/orf-america-comments/2025-tariffs-have-hurt-us-manufacturing-employment-and-consumers
30. "Tariffs push manufacturing into stagnation through 2025: ISM forecast." Manufacturing Dive, May 19, 2025. https://www.manufacturingdive.com/news/ism-economic-forecast-tariffs-revenue-production/748452/