Gabriela Jones
Staff Editor, Delaware Journal of Corporate Law, Volume 50
Introduction
After almost 40 years, Party City—a Delaware-incorporated company—is pitching the confetti, popping its balloons, and closing its doors due to irrevocable financial hardship.[1] Although there are several reasons behind the company’s closure, inability to withstand post-pandemic inflation and economic struggles largely contributed.[2] The remaining individual franchisees are facing fear of closure amidst increasing inflation and widespread economic problems.[3] In support of his re-election, President Trump’s campaign largely centered on fixing the affordability crisis and other economic problems occurring throughout the nation.[4] To address these concerns, one of the actions the Trump administration imposed is the use of tariffs. President Trump encourages tariffs as a way to help balance the federal budget and bolster the economy to achieve positive economic outcomes for the American people.[5] However, will the sweeping imposition of the tariffs create mass problems for companies, like Party City, which rely on foreign imports for the success of their business?[6] This blog will explore information about tariffs, discuss country-specific tariffs, legal considerations, and conclude with what to expect as the country moves forward through unprecedented times.
What is a Tariff?
A tariff is a tax levied by governments on the value of imported goods and services.[7] Tariffs are utilized as a source of revenue, protection for domestic industries, advancement of foreign policy goals, and as leverage in trade negotiations.[8] The companies who are importing goods to the United States pay additional tariff fees at any port of entry to Customs and Border Control.[9] Companies importing the goods offset the price of the additional fee onto their customers in the form of higher prices.[10] Ideally, the revenue gathered from the tariffs is meant to protect and encourage domestic industries, thereby keeping the domestic wages high.[11] However, economists and politicians are skeptical about tariff efficiency. Recently, numerous studies have focused on tariffs, assessing their output and growth as an attempt to gauge potential effects on domestic and international markets. These studies highlight how increased use of tariffs during escalating trade tensions pose a serious risk to businesses, trade policies, supply chain efficiency, and overall higher costs displaced to the consumers.[12]
Country-Specific Tariffs
Currently, President Trump’s executive orders are issued at a rapidly changing pace. These actions, deemed as a “trade war,” involve targeting tariffs against several different countries. Beginning in February 2025, the tariffs imposed against Canada and China specifically have dictated large portions of the media discourse.[13] The tariffs issued on Canadian goods include auto, imports covered by the USMCA, fertilizer, steel, and aluminum. The tariffs announced were originally under exemption that expired on April 2, 2025. Under those exemptions, $253 billion of the $413 billion imports were expected to be affected with the imposition of these tariffs.[14] Canada placed 25% retaliatory tariffs on more than 25 billion US exports.[15] These exports include dairy products, meats, grains, wine, beer, apparel, motorcycles, cosmetics, and paper products.[16] The relations between the United States and Canada’s trade is continuing to unfold.
In addition, Trump issued an initial 10% tariff on all Chinese imports thereafter, raising tariffs an additional 20% on all imports.[17] Most recently, China is facing threats of an increase to 104% levies on all exports to the United States.[18] China announced retaliatory tariffs on almost 14 billion United States exports at rates now at 84%.[19] An estimated amount of over 430 billion imports will be affected.[20] China added additional retaliatory tariffs on United States’ agricultural exports of over 17 billion at the same rates.[21] Affected products include chicken, wheat, corn, soybeans, pork, beef, and fruit.[22] The Chinese government has since blocked numerous United States based defense companies, stating they “violate normal market trading principles,” and that the current tariff actions by the United States “disrupt[] the stability of the global industrial chain and supply chain.”[23] The turbulence caused by these recent sweeping tariffs is drawing condemnation from various world leaders and risking devastation to the global trade markets.[24]
Legal Considerations
Admist the 158 lawsuits filed against Trump’s executive actions, missing from the list are any lawsuits regarding the tariff implementations.[25] Why? The reasons are twofold. First, because imposition of tariffs involves global trade rules and international law, the World Trade Organization retains the jurisdiction to hear these types of disputes.[26] There are numerous complaints filed on behalf of China and Canada in reference to the tariffs, which are pending consultation.[27] It is likely that, due to the United States’ previous blockages to the appointment of new appellate judges to the WTO’s body, many of the pending disputes will be delayed.[28] However, reporters and economists alike are proposing a potential loophole that could bring the legal fight to United States’ Courts.
Trump’s actions are accused to have violated the 2020 United States–Mexico-Canda Agreement (“USMCA”) agreement ratified by Congress. The USMCA modernized and replaced the American Free Trade Agreement (“NAFTA”).[29] The USMCA provides review and dispute settlement procedures regarding trade disputes between the three countries. Trump’s imposition of the tariffs are alleged to have violated important sections of the USMCA, namely for violating the free trade principles under the act.[30] President Trump defends against these allegations by citing to the International Emergency Economic Powers Act (“IEEPA”) which provides the President broad authority to regulate a variety of economic transactions following declaration of a national emergency.[31] In January 2025, one of Trump’s first actions was to declare a national emergency for various reasons; thereby providing Trump a clear path forward with his tariff plan. The USMCA is scheduled to undergo its legislated six-year review in 2026—critics suggest that reform measures must be implemented.
Moving Forward
With President Trump’s actions within the bounds of law under the national emergency exception, businesses must stay vigilant amidst the changes, delays, and modifications. As seen before, businesses who rely on imports are at the highest risk for impact, thereby funneling the negative effects to customers. For example, in 2024, Delaware’s agriculture and high-tech manufacturing industries add up to almost 3.6 billion, with 11% exports going to China.[32] These industries are likely to feel quick effects of the Chinese tariffs. Additionally, Delaware’s soybean industry is the state’s second largest export and one of the most profitable for farmers in the state.[33] Delaware’s agriculture industries felt the negative impacts of Trump’s first round of tariffs in his first term. The retaliatory tariffs are a looming risk that would challenge the profitability and demand margins throughout the state in many different industries.
These risks amplified on a national scale begs the question: how well-equipped are United States businesses to deal with the varying implications of the tariff trade war? Many executives and economists are disturbed about the outlook of the trade war and the chaos ensuing from the executive actions.[34] These high-positioned executives are concerned that the chaos will negate ability to effectively navigate through these trying times as the US is headed toward a recession.[35] With uncertainty and fear looming, businesses and consumers are looking for the light at the end of the tariff tunnel. At this time, the only way forward is through careful monitoring of the present situation and hope that the executives are primarily focused on what is best for the American economy when making such decisions.
About the Author
Gabriela is a second-year law student at Widener University Delaware School of Law and will be an upcoming Articles Editor for Volume 51 of the Delaware Journal of Corporate Law. She currently is working for Burns White in the Healthcare Litigation Department. She will be moving on to become a Law Clerk for the Honorable Deborah Ryan in Chester County for the Summer 2025 session. She will continue to participate as a Delaware Civil Law Clinic Intern in Fall 2025. She is excited to learn about all facets of law through these experiential opportunities to effectively shape her professional path forward.
[1] Alina Selyukh, So Long, Party City, and Thanks for All the Balloons, NPR Bus., https://www.npr.org/2025/02/25/nx-s1-5287775/party-city-bankruptcy-amazon-closure (Feb. 27, 2025, 5:05 AM).
[2] Id.
[3] Daniel Miller, As Party City Stores Close For Good, These Brands May Take Their Place, Fox 29 Bus. (Feb. 28, 2025, 3:21 PM), https://www.fox29.com/news/party-city-stores-close-brands-replacement.
[4] David Goldman, If Trump Wants to Fix the Inflation Crisis, He Has a Funny Way of Showing It, CNN Bus. (Feb. 24, 2025, 8:55 AM), https://www.cnn.com/2025/02/24/economy/trump-inflation-tariffs/index.html.
[5] Michelle Price, How Trump Justifies His Tariffs – From Budget Balancing to Protecting ‘The Soul’ of America, AP News, https://apnews.com/article/trump-tariff-justifications-50f0b4416234e63c7136eaa5c5f96759 (Mar. 6, 2025, 7:16 AM).
[6] Party City Records, https://www.importgenius.com/importers/party-city (last updated Nov. 15, 2024).
[7] Christopher A. Casey, Cong. Rsch. Serv. IF11030, U.S. Tariff Policy: Overview (2025).
[8] Id.
[9] Paul Wiseman, 5 Things to Know About Tariffs and How They Work, PBS https://www.pbs.org/newshour/economy/5-things-to-know-about-tariffs-and-how-they-work (Apr. 3, 2025, 6:51 PM).
[10] Id.
[11] W. M. Curtiss, Tariffs, 10 Fin. Analysts J., 35, 36 (1954).
[12] Davide Furceri, et al., Are Tariffs Bad for Growth? Yes, Say Five Decades of Data from 150 Countries, 42 J. Pol’y Modeling 850, 856–57 (2020).
[13] Erica York & Alex Durante, Trump Tariffs: Tracking the Economic Impact of the Trump Trade War, Tax Found., https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/ (Apr. 11, 2025).
[14] Id.
[15] Id.
[16] Max Saltman et al., Canada Warns Trump on Tariffs: Retaliation Is Coming April 2, CNN Bus., https://www.cnn.com/2025/03/28/business/canada-tariffs-carney-trump-retaliaton/index.html (Mar. 29, 2025, 9:33 PM).
[17] York & Durante, supra note 13.
[18] Ana Swanson & Alan Rappeport, As Trump’s Sweeping Tariffs Kick In, Officials Signals Openness to Talks, N.Y. Times, https://www.nytimes.com/2025/04/08/us/politics/trump-tariffs-greer.html (Apr. 9, 2025, 12:01 AM).
[19] Jesse Pound, China Slaps 84% Retaliatory Tariffs on U.S. Goods in Response to Trump, CNN Bus., https://www.cnbc.com/2025/04/09/china-slaps-retaliatory-tariffs-of-84percent-on-us-goods-in-response-to-trump.html (Apr. 9, 2025, 3:27 PM).
[20] David Lawder et al., Trump Stokes Trade War as World Reels From Tariff Shock,Reuters,https://www.reuters.com/world/trump-stokes-trade-war-world-reels-tariff-shock-2025-04-03/ (Apr. 4, 2025, 5:06 AM).
[21] Noam Scheiber & Keith Brasdher, China’s Tariffs on U.S. Agricultural Products Take Effect, N.Y. Times, https://www.nytimes.com/2025/03/10/business/china-tariffs-us.html (Mar. 12, 2025).
[22] Id.
[23] Simone McCarthy, China Hits Back as Trump’s Tariffs Go into Effect 4pm Tuesday, CNN Bus.,https://www.cnn.com/2025/02/04/business/china-us-trade-retaliation-hnk-intl/index.html (Feb. 4, 2025, 4:00 PM).
[24] Lawder et al., supra note 20.
[25] Litigation Tracker: Legal Challenges to Trump Administration Actions, Just Sec. https://www.justsecurity.org/107087/tracker-litigation-legal-challenges-trump-administration/ (Apr. 8, 2025).
[26] Chronological List of Disputes Cases, World Trade Org. https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm (Apr. 4, 2025).
[27] Id.
[28] The World Trade Organization: The Appellate Body Crisis, Ctr. for Strategic & Int’l Studs.https://www.csis.org/programs/economics-program-and-scholl-chair-international-business/world-trade-organization (last visited Apr. 9, 2025).
[29] FTA Dispute Settlement: USMCA, Off. U.S. Trade Rep., https://ustr.gov/issue-areas/enforcement/dispute-settlement-proceedings/fta-dispute-settlement/usmca (last visited Apr. 9, 2025).
[30] See Jim Wiesemeyer, Trump’s Tariffs on Canada and Mexico Spark USMCA Controversy, Pro Farmer (Mar. 6, 2025, 11:30 AM), https://www.profarmer.com/news/policy-update/trumps-tariffs-canada-and-mexico-spark-usmca-controversy.
[31] Christopher A. Casey & Jennifer K. Elsea, Cong. Rsch. Serv., R45618, The International Emergency Economic Powers Act: Origins, Evolution, and Use (2024).
[32] Shane Brennan, How Additional Tariffs Could Affect Delaware’s Agriculture and Logistics, Del. Online, https://www.delawareonline.com/story/money/business/2025/01/15/donald-trump-tariffs-affect-delaware-economy/76732249007/ (Jan. 18, 2025, 2:49 PM).
[33] Id.
[34] Eric Rosenbaum, Recession is Coming Before End of 2025, Generally ‘Pessimistic’ Corporate CFOs Say: CNBC Survey, CNBC, https://www.cnbc.com/2025/03/25/recession-is-coming-pessimistic-corporate-cfos-say-cnbc-survey.html (Mar. 26, 2025, 1:46 PM).
[35] Id.
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