by Lloyd's List

HISTORICALLY high tariffs are confounding US importers and affecting containerised volumes. US importers are desperate for more stability on costs, yet recent legal developments could spur even more uncertainty.

On August 29, the US Court of Appeals for the Federal Circuit confirmed the May decision by the Court of International Trade that US President Donald Trump’s tariffs under the International Emergency Economic Powers Act of 1977 are illegal.

CAFC stayed enforcement until October 14, allowing time for the Trump administration to appeal the decision to the US Supreme Court, which is on summer recess until early October.

Thus, there is no immediate effect on US import duties and, consequently, none on container shipping markets.

The Trump administration filed its appeal with Supreme Court on Wednesday night. It requested a decision on whether the court would hear the case by September 10, briefs and replies to be filed by October 30, and oral arguments in the first week of November.

“At this point, we think the Supreme Court’s final ruling is a coin toss,” wrote Evercore ISI global policy analyst Sarah Bianchi in a recent client note. “On one hand, we think the litigation to date shows the petitioners have the balance of the legal arguments on their side.

“On the other hand, the Roberts court [referring to chief justice John Roberts] has historically found ways to avoid upending signature presidential initiatives.”

Refund bonanza ahead?

If the court rules against IEEPA tariffs, or declines to hear the case, the initial effect should be positive for US importers and container shipping demand. IEEPA tariffs already paid, by the Trump administration’s own admission, would have to be refunded.

“New 2025 tariffs have raised $88bn in revenue year-to-date through August, with the new tariffs responsible for about $23bn in revenues in August alone,” said the Budget Lab at Yale on Wednesday.

The Budget Lab estimated that the average US tariff level in August was 18.2%, the highest since 1934, during the Great Depression. Actual tariff payments are lower, it said, at 11.5% in August, due to a combination of frontloading, payment lags and “tariff avoidance and evasion”.

Bianchi estimated that IEEPA refunds could be as high as $100bn-$200bn if the Supreme Court rules against IEEPA tariffs.

Refunds would boost bottom lines and sentiment of US importers and be a plus for container shipping demand, but the money would take time to be returned.

“Watch for the government to make the refund process slow and onerous, consistent with a broader trend of the administration dragging its feet in response to court orders,” wrote Bianchi.

One possibility is that financial firms would step in and offer importers immediate cash, reportedly at 20 to 30 cents on the dollar, and buy the IEEPA refund rights to pursue themselves.

Plan B for Trump if he loses case

The bad news for shipping demand is that a loss will compel the Trump administration to replace the IEEPA tariffs — the reciprocal tariffs and fentanyl emergency tariffs — with a patchwork of other levies that could create even more uncertainty for container trades.

New sectoral and country-specific tariffs would emerge, some of which would “stack”, and some of which would have precedence over the others, causing more confusion.

“If the Supreme Court strikes down the IEEPA tariffs, the administration will look to quickly pivot to other authorities to preserve much — though probably not all — of the existing IEEPA tariffs,” wrote Bianchi.

Trump could immediately use Section 122 of the Trade Act of 1974 to implement blanket tariffs of up to 15% for 150 days as a stopgap.

That would give the administration time to ramp up tariff investigations on countries and sectors via its existing powers under Section 301 of the Trade Act of 1974, as well as on sectors via the Section 232 national security tariffs of the Trade Expansion Act of 1962.

In the case of China, existing Section 301 powers would allow the administration to quickly replace IEEPA tariffs without further investigation, but on a global basis, there would be a problem: new Section 301 and 232 tariffs take time. Hearings are required.

“There is not bandwidth to conduct a 301 investigation on every single country,” Bianchi said, meaning that some countries would see a lower rate. The administration “could try to roll over the 15% under Section 122 for another 150 days, but this would likely be challenged”, she said.

The administration would “likely also lean more heavily” on Section 232 sectoral tariffs related to national security, she added.

Highlighting this prospect, the Trump administration said in late August that it will conduct a 232 investigation into US furniture imports, a move that could face legal challenges given furniture’s clear lack of importance to US national security.

Meanwhile, a 150-day 15% tariff under Section 122 would be lower than existing IEEPA tariffs on several large trading partners, providing marginal relief for some US importers. India and Brazil are currently at 50%; Taiwan and Vietnam are at 20%; and India, Malaysia and Thailand are at 19%.

One way the Trump administration could avoid the tariff rate reduction would be to instead use Section 338 of the Smoot-Hawley Tariff Act of 1930, which allows tariffs of up to 50%.

US Treasury Secretary Scott Bessent confirmed that future use of Smoot-Hawley was a possibility in an interview with Reuters on Monday.

However, unlike the 15% tariffs under Section 122, using Smoot-Hawley for the first time in almost a century would raise legal questions, potentially precipitating another court challenge, repeating the IEEPA legal process and further adding to trade confusion.

New trade complications could emerge

The fate of the investment pledges obtained by the US when it used IEEPA tariffs as a “stick” adds further complexity to future container demand scenarios.

When Trump warns of the trillions that will be lost if the courts rule against IEEPA tariffs, he is primarily referring to these investment commitments — which remain legally non-binding — more so than to federal income from taxes on US importers.

“Almost all of this investment, and much more, will be immediately canceled!” wrote Trump on Truth Social. “In many ways, we would become a Third World Nation, with no hope of GREATNESS again.”

In the administration’s Supreme Court appeal, Bessent said: “The recent decision by the federal circuit is already adversely affecting ongoing negotiations. World leaders are questioning the president’s authority to impose tariffs, walking away from or delaying negotiations, and/or imposing a different calculus on their negotiating positions.”

The loss of IEEPA tariff powers could make countries less likely to follow through with investment pledges, which could spur retaliation from the US, which could in turn spur retaliation from trading partners.

All of which implies that the only certainty for US container shipping demand is more uncertainty.

If the Supreme Court rules in favour of emergency tariffs, then Trump can use IEEPA authority at will, and change tariff rates on a whim. If the ruling goes against Trump, a whole new set of variables will emerge.