SHIPPING has faced extreme levels of uncertainty under Trump 2.0 — and the global trading landscape just became even more uncertain.

The US Court of International Trade ruled on Thursday that US president Donald Trump’s use of the International Emergency Economic Powers Act of 1977 (IEEPA) to institute tariffs is illegal. The CIT panel of judges gave the Trump administration 10 days to unwind IEEPA tariffs.

The CIT ruling covers all of the so-called reciprocal tariffs against countries worldwide as well as the ‘fentanyl emergency’ tariffs against Canada and Mexico, but not sectoral tariffs such as those on the aluminium, steel and automotive industries.

Shipping impact

“For now, this development is a positive for sentiment,” said Jefferies shipping analyst Omar Nokta. “Container shipping sentiment likely benefits the most. The LPG segment is also likely to see an improvement in sentiment.”

The downside is that the ruling “creates an added layer of uncertainty, with expectations of further court hearings and perhaps different approaches by the US administration to push forward with tariffs”, said Nokta.

Lars Jensen of consultancy Vespucci Maritime said in an online post: “In practical terms this adds a new level of uncertainty into the mix for US importers.”

According to Xeneta senior analyst Emily Stausbøll, the ruling “is clearly positive news for shippers” but she cautioned that “the story is far from over”.

“Even if the appeal fails, Trump will not throw in the towel and he has other levers to pull to achieve the same outcome,” she said.

Stausbøll noted that the US-China tariff reprieve has already led to a rush to import goods and the CIT decision “will add further fuel to this demand”.

“Ongoing frontloading of imports will see big increases in spot rates on June 1,” she said.

“Average spot rates will rise at least 18% from the Far East to the US west coast and 14% into the US east coast. Data is being received from shippers paying far higher rates than this, so the market has the potential to increase even more dramatically in early June.”

Next steps for court case

The Trump administration immediately appealed the CIT decision. The dispute now passes to the US Court of Appeals for the Federal Circuit. The Department of Justice, representing the Trump administration, maintained in a filing on Wednesday that it is “likely to prevail on appeal”.

The Trump administration is in the midst of negotiating deals with its top trading partners, using the reciprocal tariffs of 10% (and 30% for China) as a cudgel.

To date, the only progress has been a framework agreement with the UK. The CIT decision is expected to undermine negotiating progress with other countries.

The DOJ sought and has now obtained an immediate stay on the CIT ruling pending the appeals court decision on the case. The appeals court granted the stay on Thursday.

The DOJ cited testimony from US Trade Representative Jamieson Greer that the CIT ruling, if maintained, would be “a foreign policy disaster scenario”. The DOJ also cited testimony from US Treasury Secretary Scott Bessent that the decision, if not stayed and ultimately overturned, would “shatter our negotiations with dozens of countries” and create an immediate risk that US trading partners “feel a renewed boldness”.

Regardless of how the federal circuit appeals court rules on the CIT decision, that federal circuit decision will almost certainly be appealed to the US Supreme Court by the losing side.

That, in turn, might run into a timing issue. The US Supreme Court goes on summer break in late June or early July and does not reconvene until October.

Trump could shift to other tariffs

“Does this mean the Trump 2.0 wars are over? Far from it,” warned Sarah Bianchi, global policy and politics analyst at Evercore ISI, regarding the CIT decision.

“The Trump 2.0 trade wars aren’t over yet,” she stressed in a client note. “We expect that the administration will pivot quickly with a three-part strategy to reimpose many of the same tariffs.

“First, the administration can use the existing China [section] 301 to raise tariffs on China. Second, the administration can turn to section 122, which gives the president explicit power to impose tariffs of up to 15% for up to 150 days to address trade deficits. This could potentially replicate the 10% global baseline.

“These two steps can likely be done in a matter of days to weeks,” she said.

“Third, the administration can launch a host of new 301 and 232 investigations to lay the groundwork for higher permanent tariffs on a host of countries and products.

“These authorities have more procedural steps so are not an immediate solution, but if done on a highly expedited basis, they could potentially be rolled out in a few months — likely during the 150-day period when the 122 tariffs are serving as a temporary band-aid.”

Krishna Guha, global policy and central banking strategy analyst at Evercore ISI, said: “In macro terms, the trade shock may be less severe [than with IEEPA tariffs], but trade uncertainty may be prolonged, in particular in strategic sectors, with some risk that Trump lashes out to restore leverage.”

Yi Xiong, chief China economist at Deutsche Bank, cautioned that “the outlook remains uncertain as the tariff break could prove temporary. The court ruling is unlikely to be a turning point in the broader trend of US-China tariff tensions.”