One day after a three-judge panel at the U.S. Court of International Trade (CIT) ruled that 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, including the 10% global tariff on U.S. trading partners, 25% tariffs placed on Canada and Mexico, 30% tariffs on China related to fentanyl and border crisis concerns, the elimination of the de minimis exemption on imports from China and called for a permanent halt of the majority of tariffs and also ruling against future modifications against them, the White House received a reprieve one day later.
That reprieve came in the form of a temporary stay of the White House’s tariffs, following an appeal made by the U.S. Department of Justice to the U.S. Justice Department to the Court of Appeals for the Federal Circuit, which reinstated the tariffs as the appeal is considered, prior to this case moving to the Supreme Court to issue an official ruling on the fate of the tariffs. In terms of next steps, the deadlines for plaintiffs and the federal government to respond are June 5 and June 9, respectively.
These developments come at a time when supply chain decision-makers continue to navigate tariff- and trade-driven uncertainty on various fronts, including: where to invest; how much capital should be allocated for investments; hiring decisions; and the potential need to reconfigure supply chains, among others.
In the meantime, though, supply chain managers and carriers remain without certainty as to the outcome so still can’t really make plans with confidence either way, according to Paul Bingham, Director, Transportation Consulting, S&P Global Market Intelligence.
“Most likely supply chain managers and carriers will continue with what they had been doing recently during the 90-day pauses, in the event the CIT ruling is overturned they’ll be back to where they were before the ruling,” he said. “If the CIT ruling is upheld and those tariffs are overturned, then they may be able to obtain tariff refunds, where the net loss would be having higher inventory carrying costs for having pulled forward inventory, and perhaps paying higher shipping rates than may be available later this year, due to transpacific ocean rates recently increasing with the surge of bookings out of mainland China.”
From a supply chain throughput perspective, Bingham observed that U.S. imports from mainland China will be likely strong into June, regardless of how the Supreme Court rules on this, if only due to the catch up to the paused and cancelled orders and blank sailings from April into May. The elimination of those tariffs won’t slow U.S. importing and if they are ruled legal, then the existing 90-day pause is likely to play out until July, with importers still trying to beat that deadline, he said.
“Of course, timing will depend on the court decision timing at this point, to know what comes next with regard to the US IEEPA-based tariffs,” said Bingham. “It is possible U.S. importers who have paid those tariffs even get refunds for the tariffs if the ruling stands that those tariffs were illegal. If those tariff stand, then the conditions revert to where we were last week before the CIT ruling.”
Prior to the stay being granted, an industry observer told LM that there are expected to be various impacts, should tariffs eventually be removed, including on 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.”
An S&P Global Market Intelligence research report said that should the CIT ruling be upheld, it would remove roughly half of U.S. imports from tariff coverage, while adding that in terms of the overall impact on supply chain costs, the White House still has other channels to increase import costs, so businesses may still not have enough certainty to plan their investments and production.
“The sectors that would benefit most from the IEEPA duties being overturned are consumer goods industries where mainland China has a high proportion of U.S. imports,” the report stated. “Among the larger import sectors those include toys (75.8% imported from mainland China in 2024), homewares (75.1%) and audio-visual equipment (37.0%) among others. All three are also highly seasonal and face sourcing uncertainties heading into the peak shipping season, which typically involves exports from Asia running from June through September. Thus far, companies have focused on tactical actions including inventory front-loading, price increases and cost negotiations, and may continue to do so during the period of tariff uncertainty.”
The firm also noted that, at a minimum, the CIT ruling makes the July 9 deadline for most countries and Aug. 12 for mainland China, related to respective 90-day pauses, irrelevant, though negotiations may continue because of the chance that a Supreme Court appeal succeeds or that the CIT decision gets narrowed. And it added, “that could prove particularly important for situations where negotiations are proving contentious or where elections are complicating the negotiating process.”
In addition to the CIT’s ruling this week, a separate ruling by a Washington, D.C.-based judge also stated that the tariffs rolled out by the White House were unlawful.
A Wall Street Journal report noted that, in the ruling by U.S. District Judge Rudolph Contreras, that the judge said the text of the IEEPA Act of 1997, as well as historical practice, indicates that the law does not encompass the power to impose the tariffs as President Trump has.
“In the five decades since IEEPA was enacted, no President until now has ever invoked the statute…to impose tariffs,” the judge wrote, the report said. And he added that his ruling would not go into effect until June 12, as the White House appeals the U.S. Court of Appeals for the District of Columbia Circuit.
Jonathan Todd, Vice Chair, Transportation & Logistics, for Cleveland-based law firm Benesch, told LM that, at the core of both the ICT and the U.S. District Judge rulings, is the question of whether IEEPA grants the President blanket authority to issue tariffs on a worldwide basis at will.
“You have these two cases and rulings and also an appeal to the deferral appeals court, and alongside this you have the White House press secretary making comments about how the administration is displeased with unelected judges essentially doing what judges do,” he said. “It really is a constitutional issue, and the question is, which body in our government holds tariff authority and to what degree can it be delegated? There is this soap opera of forces.
You have importers litigating, you have states litigating two cases. You have judges in the mix, you have an administration who’s taking issue with judges doing what they’re doing. And at the core of it, you have the Constitution of the United States of America, which grants tariff authority to Congress, and the question is whether Congress did or could grant kind of blanket authority to the President. So, it’s very much a wild game.”
