Tariff Ruling Gives Businesses Hope, but They’re Soon Unmoored Again

 

Tariff Ruling Gives Businesses Hope, but They’re Soon Unmoored Again

 

Companies welcomed a court decision striking down President Trump’s tariffs. Then a stay of that ruling left no one breathing easy.

 

Lydia DePillis

By Lydia DePillis

May 29, 2025

https://www.nytimes.com/2025/05/29/business/economy/trump-tariffs-ruling-businesses.html

 

Emma Mcilroy’s apparel company, Wildfang, had been working overtime to move its production out of China in the months since President Trump launched his trade war. Finding another factory that could produce jumpsuits and button-downs — while every other U.S. importer was also jockeying for space — was a huge drain on the 11-person staff’s attention.

 

But when Ms. Mcilroy saw on Wednesday night that a federal court had ruled most of Mr. Trump’s tariffs illegal, all of that work paused. Would the tariffs be gone when her next shipment arrived in August, or not?

 

“I have absolutely no idea where it’s going. I am learning in real time how to run my business,” Ms. Mcilroy said Thursday. “Yesterday I would’ve told you, ‘Yes, absolutely, you’re going to see me manufacturing stuff in Vietnam.’ Today I’m not sure.”

 

American businesses are rapidly digesting the latest twist in Mr. Trump’s roller-coaster trade war, which has made it impossible to plan more than a few weeks in advance. It’s particularly hard on industries that place their orders entire seasons ahead of time.

 

The details of Wednesday’s decision seemed likely to bring relief. A three-judge panel of the U.S. Court of International Trade ruled that the Trump administration had acted illegally in using an emergency powers law to impose 30 percent tariffs on goods from China, 25 percent tariffs on most goods from Mexico and Canada, and 10 percent on everyone else. The court gave the White House 10 days to halt the new duties.

 

Hours later, a higher court stayed the decision.

 

If the initial ruling sticks, it will preclude the return of steeper “reciprocal” tariffs that Mr. Trump paused for 90 days in early April. It might even allow companies that have paid the emergency tariffs over the past several months to claim refunds, already an established process at Customs and Border Protection.

 

And it could result in the reinstatement of the de minimis exemption on goods from China. Using the emergency powers law, Mr. Trump closed the loophole, which had for years allowed Chinese shipments worth $800 or less to enter the country tariff-free.

 

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Even briefly, companies took a little solace in the idea that Mr. Trump’s power to set the terms of trade had been curbed. But the Trump administration quickly appealed the ruling and received the stay — keeping the tariffs in place — while the U.S. Court of Appeals for the Federal Circuit considers the case. Appeals could continue all the way to the Supreme Court.

 

That’s why few are going back to business as usual.

 

Companies that process customs paperwork and payments on behalf of importers said they would keep collecting the tariffs struck down by the court. “With nothing official coming down the pipeline from U.S. Customs, I am advising the status quo,” said Adam Lewis, a co-founder of Clearit, a customs broker.

 

The White House’s attitude toward judicial authority in other cases — such as the administration’s refusal to return Kilmar Abrego Garcia, an immigrant sent to a prison in El Salvador, despite a Supreme Court order — also raises doubts about whether Customs and Border Protection would abide by the ruling on tariffs.

 

“I think about the Abrego Garcia decision and whether or not the executive branch even listens to the courts,” said Matt Hassett, the chief executive of Loftie, a company that makes lamps and alarm clocks in China. “It’s not out of the question that they would just ignore it or immediately try to replace it with a tariff under another authority.”

 

Mr. Hassett said he had to raise prices significantly, which depressed sales, and was preparing to pay as much as 70 percent on a shipment that would depart soon. Loftie plans to keep working to move production out of China, since trade barriers are likely to return in some fashion, he said.

 

The Retail Industry Leaders Association, a trade group for large retailers, also cautioned its members that the White House could try to impose tariffs through other avenues.

 

“The constant on-and-off-again nature of the tariffs has made business planning incredibly difficult,” said Blake Harden, the association’s vice president for international trade.

 

Deciding what to charge customers has been a challenge since Mr. Trump took office and will remain so, according to executives who were processing the latest development on earnings calls on Thursday.

 

Most suggested that while lower tariffs were beneficial, the court’s ruling and its appeal by the Trump administration threw their planning into further chaos.

 

“I would say it is a fluid situation, given the news last night and this morning,” Kohl’s chief financial officer, Jill Timm, said on the company’s earnings call. But if there is a pause in tariffs, she added, “that could be a positive.”

 

For others, the whipsawing made them finally give up on updating their pricing and strategy with every change in tariffs.

 

“So I just decided last night the only thing I can do is say to customers: ‘Here’s the number. We’ll take the risk,’” said Miriam Tuerk, chief executive of Clear Blue Technologies, a Canadian manufacturer of solar equipment. For products headed to the United States, it’s not clear what profit margins will look like.

 

“‘If we do better, we’ll give you a rebate,’” Ms. Tuerk said on an earnings call. “That’s where we’re at. So the chaos and uncertainty is definitely going to cause issues. It’s not fun.”

 

E.L.F. Beauty, a drugstore cosmetics line that makes most of its products in China, had announced plans to raise prices by $1 in August — its third price increase in 21 years — to partly cover tariffs that reached a high of 170 percent of the value of a shipment that arrived in April.

 

“We didn’t have a choice but to continue to bring product in; otherwise, there won’t be anything on the shelf,” the company’s chief executive, Tarang Amin, said.

 

What happens to the price increase if tariffs against China and elsewhere are indeed blocked? “We would absolutely roll that back,” he said.

 

For many businesses, the White House’s trade war has been damaging not just because of the taxes on imports but also because of the tariffs that other countries have imposed in response. The Court of International Trade’s decision created some hope that those may ultimately be relaxed as well — although at the moment, other nations have little incentive to negotiate with the Trump administration, since the court may limit its leverage.

 

Trim-Tex, which makes drywall construction accessories in Lincolnwood, Ill., and Miami, exports 20 percent of its output, including to Canada, which has imposed tariffs on a broad swath of U.S. products.

 

Sales at the company, which has 250 employees, are down 10 percent year over year, said its chief financial officer, Matt Totsch. He hopes the court decision will make international markets less wary of trading with U.S.-based manufacturers.

 

“Hopefully in the short term, it shows countries this is not what we stand for,” Mr. Totsch said. “The United States needs to be known as a reliable partner in the world, and hopefully this will show that.”

 

Reporting was contributed by Peter Eavis, Madeleine Ngo, Kevin Draper, Sydney Ember and Julie Creswell.

 

Lydia DePillis reports on the American economy. She has been a journalist since 2009, and can be reached at lydia.depillis@nytimes.com.