Shippers hold their breath as President Trump appeals court ruling on tariff illegality

Any shipper just learning that a significant portion of President Trump's tariffs have been ruled illegal by a court should not celebrate prematurely.

The White House has filed an appeal against the judgment by the U.S. Court of International Trade, which ruled that the president had overreached his authority in imposing reciprocal and fentanyl-related tariffs under the International Emergency Economic Powers Act (IEEPA).

The court had given the Trump administration 10 calendar days to issue "necessary administrative orders" to terminate the affected tariffs. However, in its appeal, the White House has requested a seven-day period to "to allow time for the Federal Circuit to consider a motion to stay and request for administrative stay." Responses to the White House's motion to suspend the order, pending appeal, are due by June 18 – meaning a wait of more than two weeks.

Although it is highly probable that the case will ultimately reach the Supreme Court, the White House still has other tools at its disposal to impose tariffs. Meanwhile, tariffs on automobiles, steel, and aluminum remain in effect, as they were invoked under a different law.

The unresolved question for shippers with goods en route to the United States is how U.S. Customs and Border Protection (CBP) will handle these imports upon arrival. Theoretically, U.S. importers could request a refund for tariffs already paid, but whether this will be enforceable remains an unknown.

Even if Mr. Trump loses this appeal, under the Trade Act of 1974, the president can still impose tariffs of 15% for up to 150 days on countries with which the U.S. has a significant trade deficit.

In filing the appeal and requesting a "stay" on the judgment, the president's lawyers wrote: "In sharp contrast to the extraordinary harm to defendants, a stay will not substantially injure the plaintiffs. For any plaintiff who is an importer, even if a stay is entered and we do not prevail on appeal, plaintiffs will assuredly receive payment on their refund with interest."

“'There is virtually no risk’ to any importer that they ‘would not be made whole’ should they prevail on appeal. The most ‘harm’ that could incur would be a delay in collecting on deposits. This harm is, by definition, not irreparable. Plaintiffs will not lose their entitlement to refund, plus interest, if the judgment is stayed, and they are guaranteed payment by defendants should the court’s decision be upheld. And defendants do not oppose the reliquidation of any entries of goods subject to IEEPA duties paid by plaintiffs that are ultimately found to be unlawful after appeal."

The court's ruling provided some insight into the challenges U.S. importers have faced due to these tariffs.
Twelve states, along with five importers led by wine importer VOS Selections, demonstrated that the tariffs were " likely to cause an economic injury," as well as "difficulties with sourcing and pricing," and that "the reduction in cash flow caused by increased tariffs also necessarily reduces the company’s inventory and the level of business that VOS can conduct, leading to an overall reduction in purchase orders…"

VOS argued that the tariffs placed "a large, immediate, strain on its cash flow," while fellow plaintiff Genova Pipe pointed to supply issues, stating: "Tariffs will directly increase the cost of raw materials, manufacturing equipment, and resale goods imported from abroad by Genova Pipe."

MicroKits alleged that at the current tariff rates, the company "cannot order parts from China and will have to pause operations when it runs out of parts, "and as a result, the company" will likely be unable to pay its employees, will lose money, and as a result may go out of business."

FishUSA noted that the tariffs had "caused [it] to delay shipment of finished goods from China due to the unpredictability of the tariff rate that will be imposed when the product arrives, and [that] it has also paused production of some products," and that these conditions had hampered its business growth.

Terry Cycling claimed it had "already paid $25,000 in unplanned tariffs this year for goods for which Terry was the importer of record," and that there were "projects that the tariffs will cost the company approximately $250,000 by the end of 2025."

The court found that the Trafficking Orders (i.e., the fentanyl-related tariffs) did not "deal with" their stated objectives. The court added: "Rather, as the government acknowledges, the orders aim to create leverage to ‘deal with’ those objectives." The court opined: "A tax deals with a budget deficit by raising revenue. A dam deals with flooding by holding back a river. But there is no such association between the act of imposing a tariff and the ‘unusual and extraordinary threat[s]’ that the Trafficking Orders purport to combat."

Meanwhile, the global and retaliatory tariffs "exceed any authority granted to the president."

The court concluded: "The court holds, for the foregoing reasons, that IEEPA does not authorise any of the worldwide, retaliatory, or trafficking tariff orders."

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Source: Phaata.com (According to The Load Star)

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