‘They're on. They're off.' Court rulings add to whiplash for businesses on Trump's tariffs.

Boston Globe

5 days ago

'We've taken a position of remaining cool and seeing what happens,' said Dana Katz, owner of
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He hasn't raised prices yet on his tailored men's suits, blazers, and other merchandise even though about 95 percent of it is imported from a variety of countries. But Katz said he's been in frequent communication with his wholesale suppliers and will have to raise prices if the tariffs remain in place.
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Right now, that's a big if.
Trump has made tariffs a centerpiece of his economic policy. He has argued that increasing the levies the US government slaps on foreign imports from dozens of nations — as high as 145 percent at one point this year on goods from China — will lure more manufacturing back to the United States and provide leverage to negotiate more favorable trade deals.
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But the higher tariffs have triggered trade wars with several foreign nations, including China and Canada, which raised their own levies on US goods in response. Trump has tried to mitigate the fallout, which included major financial market selloffs, by reducing or pausing some of the increases, including through
Trump's actions also spurred lawsuits from business owners and several Democratic-run states arguing that he had exceeded his authority under the International Emergency Economic Powers Act of 1977. Trump had said the federal trade deficit and the flow of fentanyl into the country constitute emergencies.
On Wednesday in Manhattan, a three judge panel of appointees by Presidents Ronald Reagan, Barack Obama, and Trump himself unanimously struck down most of the president's tariffs, saying the law did not give him 'unbounded authority.'
The court kept in place tariffs on steel, aluminum, and automobiles imposed under other laws. Then on Thursday, that ruling was temporarily halted by the US Court of Appeals for the Federal Circuit.
Separately, US District Judge Rudolph Contreras, an Obama appointee, granted a preliminary injunction Thursday against the same set of tariffs in a case filed
in Washington, D.C.,
by two small businesses. He paused the injunction for 14 days to give the Trump administration time to appeal.
White House officials decried the rulings as the actions of 'rogue judges' and predicted Trump ultimately would prevail.
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'As far as we're concerned, our trade agenda is moving forward . . . and we fully expect to win this case in court,' White House press secretary Karoline Leavitt said. Administration officials are continuing to negotiate trade deals with foreign leaders and Leavitt said Trump spoke to Japan's prime minister, Shigeru Ishiba, Thursday in a call she described as 'very good.'
But William Reinsch, a trade expert who served in the Clinton administration, predicted that foreign officials won't want to agree to any trade deals until the tariff court cases are fully resolved.
'It seems to me that no government in its right mind will agree to concessions given the possibility that the need to do that might go away,' said Reinsch, now a senior adviser at the bipartisan Center for Strategic and International Studies think tank.
The stalling of trade talks will just add to the uncertainty on tariffs that has frozen US businesses, he said.
'They're up. They're down. They're on. They're off. There are exceptions. There aren't exceptions. They're bigger. They're smaller. They're postponed. They're not postponed,' Reinsch said. 'I mean, who knows on any given day what's going to happen? And so nobody does anything because they're waiting for the dust to settle."
Senator Peter Welch, a Vermont Democrat, got a firsthand taste of the trouble
when he held a roundtable on tariffs in Manchester, Vt., on Wednesday with local businesses, including fishing gear manufacturer
Orvis and Back Roads Granola.
'We literally have situations . . . where if they're importing something, it'll be on a cargo ship from abroad, and just before it hits the port there will be a 50 percent tariff increase,' Welch told the Globe. 'They're complaining about the added price, but also the total uncertainty that makes it impossible to do their business, whether it's super-premium granola or super-premium fly casting rods.'
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Trump's burst of tariffs in April raised the overall average US rate on foreign goods tenfold, to 25 percent from about
2.5 percent at the end of last year, said Gregory Daco, chief economist at global consulting firm EY-Parthenon. The temporary suspension of many of the tariffs on China earlier in May lowered that average tariff rate to 14 percent — still the highest since 1939, Daco said.
If this week's court rulings are upheld, the rate would drop to 4.6 percent, which while much lower is still nearly double what it was at the start of the year.
'When you raise tariffs in such an extreme manner to levels that, until recently, were inconceivable and then you lower them back down to levels that are still at historical highs, you're still implementing a significant increase in cost of doing trade and doing business,' Daco said.
The ongoing tariff rollercoaster has consumed business owners, said Greg Reibman, president of the Charles River Chamber, whose members are in Newton, Needham, Watertown, and Wellesley.
'It's a big issue for everybody that I hear from, the retailers and restaurants or anybody who's dealing with any kind of supply chain issue,' he said. 'If you're a business trying to decide when to place an order, it's like playing roulette right now.'
That's why Katz, of Miltons, which has stores in Braintree, Chestnut Hill, and Burlington, has been trying to remain calm.
'We certainly watch it and discuss it every day, and we have conversations with our suppliers every day,' he said. 'There's certainly a degree of uncertainty. I liken it to COVID 2.0.'
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Jim Puzzanghera can be reached at