During a period of ongoing tariff-driven economic uncertainty, a decision made yesterday by a three-judge panel at the U.S. Court of International Trade could potentially have major impacts on trade policy, tariff levies, and global supply chain and logistics operations, too.
In its ruling, the U.S. Court of International Trade stated the President Trump had misused the International Emergency Economic Powers Act (IEEPA) of 1997, in steps he took to implement tariffs on various consumer and industrial products, which include the 10% global tariff on U.S. trading partners and also 25% tariffs placed on Canada and Mexico, and 30% tariffs on China.
What’s more, the court said that President Trump overstepped his authority in invoking the IEEPA Act of 1997 in rolling out these tariffs, noting that U.S. trade deficits with other nations—the major driver for the White House’s reciprocal tariffs announced on April 2, which was dubbed “Liberation Day” by President Trump—do not represent what the court called an “unusual or extraordinary threat,” as per the IEEPA, to unilaterally impose tariffs, as it needs to be authorized by Congress instead.
While the court also ordered a permanent halt to the majority of the tariffs implemented by President Trump since January, it also ruled against future modifications to them. But that comes with the caveat that this ruling does not apply to current 25% tariffs on steel, aluminum, and autos, which are issued under Section 232 of the Trade Expansion Act of 1962.
As for steps the White House could take, various reports have indicated an appeal of the ruling has been filed by the U.S. Justice Department to the Court of Appeals for the Federal Circuit, with the possibility it could get special provisional reviews at the Supreme Court, and it has 10 days to comply. Other potential options cited by industry stakeholders include: invoking Section 122 of the Trade Act of 1974, which does not require a formal investigation and is viewed as the quickest path, with tariffs rising up to 15% for 150 days; invoking Section 301 of the Trade Act of 1930, which requires an investigation of key U.S. trading partners and is a lengthy process to enact; or invoke Section 338 of the Trade Act of 1930, which calls for tariffs up to 50% on nations that discriminate against the U.S., which has never been used before.
In terms of the impact of this ruling on global supply chain, logistics, and trade activity, an industry observer told LM that based on how the White House responds there are expected to be various impacts, including economic activity, inventory front-loading, and the budget bill moving through Congress, as it pulls the tariff revenue out of it.
“I think it will have some ramifications on the supply chain but we need to see what next week brings,” he said. “If it goes back to the Supreme Court (if the Appeals Court upholds the Federal Court), purchasing managers may look at a window of four-to-six months (or longer) before the Supreme Court can rule on it. That could change how companies treat inventory and hedging for 2026. There is still a lot to uncover here and it probably won’t be clear for a few more days.”
In a LinkedIn post, Lars Jensen, CEO of Copenhagen-based Vespucci Maritime, explained that in practical terms this adds a new level of uncertainty into the mix for the U.S. importers.
“Not only do they have to contend with the risks associated with changing tariffs,” wrote Jensen. “Now it is also cast into doubt whether or not the announced tariffs will even be implementable—and this also raises the question whether tariffs paid in recent weeks can ultimately be reclaimed. If the tariffs are ultimately (after appeals) found to be unlawfully implemented, shippers should have a good case for getting the paid tariffs back. This is a complex legal battle unfolding in the US which means that appeals and counter-appeals can cause the issue to drag out for a while.”
In an interview with LM, Dr. Walter Kemmsies, president of The Kemmsies Group, a provider of industrial and logistics real estate brokerage and consulting services, explained that for the court to unanimously make this decision is telling.
“What the rest of the country is telling President Trump is that it understands what he is doing and trying to achieve, but the way he is going about it is making it more costly than it has to be,” said Kemmsies. “Any changes to the terms of trade are going to affect the structure of the economy. You do that slowly; this is not like a band aid that you rip off. Trump is not going to be around after four years, and this is a window of opportunity to get the job done, so he is in a bit of a rush. But he does not seem to have a competent staff to do so. Anyone they bring in is going to have a steep learning curve or they are going to make a lot of wrong assumptions. I think they rushed things, and it caused a lot of unnecessary damage.
The message is that the White House was never given any authority to do this kind of stuff to the economy and the world period, so stop that. That does not mean you shouldn’t be trying to improve the terms of trade, but it means you should find a proper constitutional means of doing so. There is section 232 and Section 301 and a few other clauses. There are plenty of ways that it can affect the change.”
And he added that the way in which the White House rolled out its reciprocal tariffs plan on April 2 did not instill confidence, due to not having the right staff and analysts, coupled with the hasty manner in which it was administered. Looking ahead, Kemmsies said that the global trade environment could start to stabilize from this point, although more uncertainty is expected. There is also the possibility of shippers being reimbursed for tariffs already paid, he added, but that outcome, at this point, is unclear, given the White House’s habit of not obeying court orders.
Looking ahead, Kemmsies said that China’s share of U.S. trade could drop from the current level of 30% to around 15%-to-18%, noting that the U.S. is “spoiled for choice,” with imports not coming from China. And he said there are around 100 products where China has a 90% or greater share—making the case for instead of the U.S. placing tariffs on all Chinese goods, it would be more effective to pick off those 100 or so commodities and in a meaningful way.
Robert Kress, CEO and founder of supply chain consultancy Waypost Advisors, observed that, from a supply chain and logistics perspective, in the short-term, there could be an influx of products to the U.S. as tariffs are assessed at the time of entry and companies will want to take advantage if they can.
“Given the Trump Administration has already appealed the decision, significant uncertainty remains, and many companies are taking a ‘wait and see’ approach to significant new investments,” he said. “It’s also unlikely to have much impact on long-lead time products given the longer-term uncertainty. It’s also worth noting that tariffs on steel, aluminum and autos remain in effect as that was declared under a different law than this ruling impacts.”
And Kress stated that in the short-term, it could help importers as tariffs are assessed at the time of import so it might offer some short-term relief. Long term is still an unknown as the Trump Administration has already appealed the decision, he said.
“Companies still need to follow best practices in regards to de-risking their supply chain and optimizing operations to offset potential tariff impacts,” he said.
