Trump's Tariffs Are Making Heads Spin Volleying Through Courts: Here's What It Means For Business

Forbes Breaking News

Jonathan Todd, an attorney at Benesch and expert on supply chains, joined "Forbes Newsroom" to talk about the recent court actions around President Trump’s tariffs and what it all means for America’s businesses.

Transcript

00:00Hi, everyone. I'm Maggie McGrath, senior editor at Forbes. A three-judge panel at the Court of

00:10International Trade ruled Wednesday night that Donald Trump's Liberation Day tariffs

00:15exceeded the authority that he has under emergency law to issue tariffs. A second federal court,

00:23also on Thursday, declared Trump's tariffs unlawful. Joining us to discuss these developments

00:29and what it all means is Jonathan Todd. He's an attorney at Benish who is a national authority

00:35on supply chain management. Jonathan, thank you so much for being here. Thanks, Maggie. I'm happy to.

00:40So tariffs have been in the news really ever since Liberation Day, but let's break down what

00:44we've heard from the Court of International Trade and also what we heard from the second court

00:48earlier today. What were their rulings? Right. So the news that happened last night was that the

00:54Court of International Trade ruled in favor of two sets of plaintiffs. Just for context,

01:00there was a group of importers that had sued to challenge the legality of these tariffs,

01:04and there was also a group of states that also sued to challenge the legality. The Court of

01:09International Trade sided with those importers, both the states and the individual companies,

01:16and determined that these tariffs, and particularly the rationale for the tariffs,

01:21was not lawful. These tariffs were based on something called IEPA. This is a law that allows

01:27emergency powers to the president, if necessary, to protect the country from true national emergencies.

01:35The argument that ultimately won over the court was that these circumstances in which the president

01:42used IEPA for these tariffs in 2025 did not qualify as national emergencies. They overextended

01:51the rationale for asserting tariffs under IEPA. And in the case of the fentanyl tariffs, which some may

01:59remember from early on in first quarter, the tariffs didn't even address the harm. The tariffs didn't

02:05directly address the issue of stopping fentanyl from coming across the borders. So the result of this

02:11is that the universal 10% tariffs and the reciprocal tariffs that are across the board on a number of

02:19countries, although everything reduced to 10%, those are now in legal jeopardy. There was also a lifting of

02:28small parcel de minimis value shipments, the ability to do that from China, that is in jeopardy now.

02:35And then the tariffs on Canada and Mexico goods, and also Chinese goods from earlier in the year that

02:42were, again, targeting fentanyl and cross-border immigration issues, those are in jeopardy.

02:49Folks still need to keep paying. This is the number one question I get. Can I stop paying today? The answer

02:54is no. What the court did last night was it required administrative agencies to, within 10 days,

03:03effectuate the order. But today, another court, the Court of Appeals, stayed that order from last night.

03:11And so right now, we're in a wait-and-see position to just see how this plays out. But it is a very

03:17interesting development that happened just within the last couple of hours.

03:22So the International Court of Trade basically says the president overstepped his authority.

03:27Today, the U.S. Court of Appeals put a stay on that. So we're basically in limbo,

03:31and anyone paying these tariffs needs to keep paying. Is that the summation of where we're going?

03:36Yeah, that's right. There are two parts to this. One is that these new tariffs, the reciprocal and

03:42then the fentanyl-based tariffs, those are challenged now. Those are, in theory, in jeopardy. We'll have to

03:48see how the appeals play out. But until that happens, folks still need to keep paying. There's no relief

03:55until this is all final. And even then, I'm receiving questions from clients about how will we get money

04:02back? And do we have to apply? Is there a process? This all remains to be seen. No president has ever

04:08before tried to use this act in this way. And so a lot of this is up in the air. And we'll just have

04:17to see how it plays out. A second piece of this that I think there's some misunderstanding about

04:21is that this does not challenge all of the tariffs that Donald Trump has imposed as president here in

04:302025. So there are a number of tariffs that are under different legal authority. Section 301 of the

04:36Trade Act, Section 232 of the Trade Act. Those are things like the actions on steel and aluminum

04:42and automobiles. There are other investigations right now for those for the semiconductor industry,

04:47lumber, copper, other commodities. Those are right now still on good footing. And I'm also receiving

04:55questions about what happened in the Trump 45 administration. So if everyone remembers eight

05:01years ago, the president rolled out tariffs on imports from China, those range from 7% to 25%.

05:07Those are still in force on their terms. There have been some suits filed over those before the

05:16Court of International Trade. And this action really has no implication for that. So it's kind of narrow

05:23the effect of this ruling overnight. But it is significant because there were many clients of mine that

05:30are in supply chain and international trade and moving product all over the world that really did not

05:37have a great deal of difficulty with managing tariffs and compliance until this year, until Liberation

05:45Day, as you mentioned. So there's a lot of focus on this. But the best message right now is to remain

05:51calm, remain compliant. And we need to see how this plays out.

05:55Now, the White House has said that it should not be up to the courts to settle this matter. What is your

06:02response to that statement?

06:04It's interesting. The short answer is that it is. It is up to the courts. And this will ultimately probably go up to

06:15the Supreme Court. This remains to be seen. But the fundamentals behind this are interesting. I think it's good

06:21for people to hear. What the Court of International Trade did was to say that under the Constitution, the power and

06:28authority to assert tariffs rests with Congress. And Congress can delegate some authority to the

06:36President of the United States. Congress has done that over the years with various acts. But it's not a

06:42blank check, at least in terms of IEPA. It doesn't give the President the authority to impose tariffs

06:49worldwide, kind of at whim, and adjust those at whim. This is really at the heart of what the Court of

06:55International Trade decided last night. And so it's fair, I suppose, to say that, you know, first, this isn't

07:03resolved. Second, Congress can essentially do what Congress pleases with respect to tariffs. But it hasn't, and it

07:10hasn't thus far, provided a means for the President to do whatever the President pleases, when it comes to

07:16tariffs. This is really where things end up. So, you know, there are different parties here with different

07:21constitutional powers. And that's really at the heart of what is happening. So for any, any Constitution buffs and history

07:28buffs, you know, this is an interesting time to watch the balance of powers in America.

07:33And speaking of the balance of powers, you mentioned a major branch of the government, the judicial, the Supreme Court, how

07:40soon could we see the Supreme Court get involved in this issue, if at all, in your opinion?

07:45Yeah, the timing of this is kind of anyone's guess. You know, I received many questions from clients who

07:53asked, you know, what is the likelihood of an injunction? What is the likelihood that we get into

07:58this? A number of lawsuits were filed, and that those will lead here where there is an injunction. Today, an

08:06injunction occurred, but it has, of course, been stayed. The short answer for anyone in business and looking to

08:13manage their supply chains was, until now, you know, don't bet on it. You know, my advice is always, let's run

08:20a good business. Let's be strategic. Let's make sure that we're managing, you know, our cost of goods

08:25day to day so that we don't have serious financial trouble. And that kind of remains to be seen, that

08:31that's where we are right now. You can't really, you know, bet on, you know, the possibility that there

08:37would be an injunction and this ends immediately. And I think that that's still good conservative advice,

08:42right? We don't know the timing in which this will play out. We don't even know exactly how it will

08:46play out. But this is a very interesting development that is frankly giving a lot of optimism

08:51to a lot of businesses and a lot of importers in the United States, because maybe it means that

08:57these additional costs that were, you know, born throughout the year to this point and still

09:03remain uncertain. Remember, the reciprocal pause is only until July 9. So we still get into third

09:09quarter before we see where even that plays out. This is still up in the air in many, many ways.

09:14But it is giving a lot of folks some optimism about where things may go and what certainty folks

09:20may have on the back half of this year. You mentioned a little bit ago, clients and companies

09:26wondering about the return of money. Can we talk a little bit more about that? If these tariffs hold

09:32as being unlawful, could businesses in America be reimbursed for the money that they have spent

09:38over the last month? And if so, how? Yeah, it's entirely possible. If monies were collected by

09:45the United States government through U.S. Customs and Border Protection and that collection was

09:51ultimately deemed unlawful, then we would expect that folks would probably receive those overpayment of

09:58duties in return. It's unclear right now how that process would work. It's unclear whether that would

10:05require some additional filings or additional exercise on behalf of the importers who paid those

10:11duties or if there will be new special mechanisms and processes in place to accomplish that. Folks really

10:19need to keep their eyes open and watch this process. One thing to potentially be concerned about is if there

10:26is a new process or even if some of the traditional customs processes are required to get a refund, there could be

10:33very hard deadlines on when those refunds could be pursued and recovered. And so it may be the case that if

10:42someone's unaware and not paying super close attention, that they could essentially waive their rights to receive a refund of

10:50monies that were overpaid. But all this remains to be seen. The key takeaway is just like from the start of

10:56everything that happened this year, let's maintain awareness, let's maintain compliance, and let's run a good

11:01business. Those are still the ground rules today. It almost sounds like you're describing the operating

11:06principles for business in any environment, but I guess they're operating principles for a reason.

11:11Are there any other questions that you've been getting specifically from your clients? I mentioned

11:16at the top of this conversation that you are a national expert in supply chain, and we at Forbes have

11:20heard from a number of entrepreneurs whose businesses have been affected and who are suffering and

11:25considering if they can stay in business even throughout the year. Is there another common question or

11:31consideration you're hearing from your clients in particular?

11:34Well, one big takeaway that I hear from many, many people is that business planning has kind of moved from

11:39strategic planning and down to tactical planning. I have clients who, on Liberation Day, woke up and

11:46seriously, emotionally believed that they were going bankrupt because they had moved supply chains, they did

11:53nearshoring, they did everything that they should have done following the Trump 45 term, and now they found that

12:00there are very significant tariffs on some of those countries where they were, they believe, encouraged to move

12:06their supply chains and move their sourcing. And so this was very serious for many, many clients, many operators

12:14until the pause. And even today, a 10% across the board universal tariff is a serious increase on landed cost of

12:24goods that needs to be managed either by negotiating with suppliers or finding cost savings elsewhere or

12:30ultimately working with customers to try and recover that in just ordinary commercial senses.

12:37So it's a very serious issue. I get asked, what can I do about this? The answer is that there's no one-size-fits-all

12:45supply chain and there's no one-size-fits-all solution. But the toolbox is full of things like

12:50managing compliance, making sure that tariff codes are correct, making sure that the values of goods are correct,

12:57making sure that we're not overpaying. I've helped some clients and we look at the values that they're

13:03paying duties on and we find that actually they're including things in dutiable value that maybe they

13:08didn't have to include or that they can structure their transactions lawfully in ways that more

13:14appropriately tailor what the dutiable value may be. And I have other clients who look more broadly at

13:20their supply chain and they say, look, I have to pay what I have to pay, but these are very large checks that I'm

13:26writing now that I didn't have to write just a short time ago. Is there a way that I can manage cash flow?

13:32And so we help them think through possibilities like using bonded warehouses and using foreign trade zones and

13:38bonded carriers and other tools like this that can save them from writing one large check up front and maybe instead

13:45write smaller checks down the road as they actually draw down inventories. So everything's tactical today.

13:51Everything's on the table. There are solutions for good businesses. Longer term, I'm confident that we will have

13:58a read on where the dust settles probably sometime in third quarter. And then I'm confident we'll return to an

14:04environment where true strategic planning and true supply chain management can once again rule the day and we can

14:11have a thriving business environment like we all want.

14:14Those are good business predictions. Let's get back to the litigation side of things. We've had a bevy of court

14:21action in the last 24 hours. What's your prediction or guess as to where we could be by the end of this

14:30week, this time next week? What do the next few days and weeks look like?

14:36Yeah, I think that it's a really challenging time because there are a lot of factors. One is that we have a new

14:43trade deal that at least was announced in framework form with the UK and with China. We also have over

14:49the weekend, two weekends ago now, a threat of 50% tariff on imports from the EU. And the president put

14:57that on pause so that negotiations could occur. One of the arguments that the government is using at this

15:04point in time is that if this decision were not stayed, that would cause serious jeopardy to America's

15:13foreign policy interests because there are so many negotiations that are happening right now. And also

15:19because this pause that we're under will only last until July 9 unless it's further extended. That's just a

15:25little more than a month away. So there are many competing factors right now that are driving how this is

15:31playing out in addition to the number of lawsuits that have been filed and the appeal that is filed

15:37right now. It's really a crystal ball game at this point in time to determine how these will work

15:44together and what the outcome may be. The number one thing remains to stay on our toes and to stay aware

15:51and to watch for change because I think that many folks in the business community did not expect the

15:58news that came out yesterday evening and yet it did. And that's one more good example of why this is

16:04really a time to stay alert and to be cautious and diligent as we run our business. It will be

16:11ongoing and we will be covering at Forbes. But in the meantime, Jonathan, thank you so much for joining

16:17us and breaking down where we are right now as it relates to Liberation Day tariffs. We really

16:21appreciate your time and your insight. Thanks, Maggie.

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