European Businesses Face New Uncertainty After US Supreme Court Tariff Ruling

The US Supreme Court's decision to strike down Trump-era tariffs has created unexpected challenges for European exporters. While initially seen as positive news, industry leaders worry the ruling adds more confusion to trade relationships. Companies now face uncertainty about future tariff policies and potential retaliation measures.

European wine producers, chemical companies, and distillers are grappling with unexpected complications following the US Supreme Court’s landmark decision to overturn major portions of tariffs imposed during the Trump administration, according to industry representatives across the continent.

The nation’s highest court ruled 6-3 on Friday that the former president lacked authority to use the 1977 International Emergency Economic Powers Act as justification for implementing tariffs without Congressional approval, citing national emergency provisions inappropriately.

While many businesses initially celebrated the outcome after years of legal challenges, European trade associations, corporations, and market analysts now express concern that the decision could make commercial relationships between the two economic regions even more unpredictable, especially after last year’s hard-fought trade agreements.

Paolo Castelletti, who serves as secretary general for Italy’s wine association UIV, warned of potential negative consequences. “This decision risks creating a boomerang effect, generating more uncertainty and freezing orders, while operators wait for a clearer regulatory framework,” Castelletti stated.

Italian wine exports to America represent a crucial market segment, generating approximately 1.9 billion euros in 2024 sales – nearly 25% of Italy’s total global wine shipments.

Industry experts believe Donald Trump will likely pursue alternative methods to implement comparable tariffs, potentially reigniting tensions between America and its key trading partners. Additionally, companies face challenges in securing refunds for previously paid tariffs.

Trump has already announced plans for a new global 10% surcharge through executive order, set to take effect “almost immediately” for an initial 150-day period. The former president also indicated uncertainty about whether refunds would occur and their potential timeline.

French President Emmanuel Macron announced Saturday that France would evaluate the impact of Trump’s new measures, while emphasizing the importance of democratic checks and balances following the Supreme Court’s decision.

Steve Ovara, who leads the Trade Practice Group at King & Spalding law firm, noted that his clients – ranging from major American manufacturers to consumer goods and technology companies – expect any tariff relief to be temporary.

“The main challenge everyone will face, at least in the short term, is additional uncertainty,” Ovara explained.

Wolfgang Grosse Entrup, director of VCI, a German lobbying organization representing chemical and pharmaceutical companies including BASF, Bayer, and Evonik, shares similar concerns.

“For our companies, this isn’t the beginning of a stable phase, but a new period of uncertainty. Those who think this means the end of tariff conflicts are mistaken,” Grosse Entrup said. “New tariffs based on different legal foundations can be imposed at any time,” he added.

Peter Sand, chief analyst at freight pricing platform Xeneta, warned that political risks remain for export-focused companies due to “irreversible” supply chain trends.

“The damage caused to many carriers’ supply chains is largely irreversible,” Sand emphasized.

France’s cosmetics association FEBEA, whose membership includes companies like L’Oréal, expressed caution about the ruling and indicated they would monitor the American administration’s response, particularly regarding potential new tariff implementations.

“We’re all accustomed to twists and turns on tariff matters,” said Emmanuel Guichard, FEBEA’s secretary general.

Massimiliano Giansanti, president of Italian farmers’ federation Confagricoltura, acknowledged that the Supreme Court decision “eliminated the entire legal basis” for Trump’s tariffs, but cautioned it complicates exporters’ situations just as they were adapting to American tariff structures.

“All of this creates profound instability at a time when we need certainties and when we’ve begun processes with our American importers,” Giansanti stated.

In Ireland, whisky exporters are taking a wait-and-see approach before making business decisions, according to Eoin Ó Catháin, director of the Irish Whiskey Association, who believes political discussions and de-escalation offer better solutions to tariff-related problems.

“This isn’t a miracle solution for eliminating tariffs,” Ó Catháin said. “It’s just an additional complication, another twist in this story,” he concluded.