Freightos Baltic: US Supreme Court ruling reshapes tariff framework but global duties largely intact

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Ocean freight rates were stable last week, easing from pre-LNY highs, with carriers limiting declines via blanked sailings. Winter weather in North America and Northern Europe caused temporary disruptions but minimal pricing effects. In port operations, ZIM vessels in Israel face labor disputes, while Maersk and MSC have taken over Panama Canal port operations previously run by HK Hutchinson. Air cargo rates fell as Asia-US volumes slowed post-LNY, down 15% from China and almost 10% to Europe, suggesting only modest near-term growth.

The highlight of the week was the US Supreme Court striking down the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose country-specific and fentanyl-related tariffs on China, Mexico, and Canada. Within hours, President Donald Trump introduced a 10% global tariff under Section 122 of the Trade Act of 1974, effective Tuesday through late July, and signalled it could rise to 15%.

Section 232 sectoral duties and Section 301 tariffs, including those on China, remain intact, along with prior exemptions. The administration intends to reinstate tariffs through these channels, though formal investigations typically take months. Additional China-focused 301 probes and ongoing 232 reviews are under consideration.

The ruling raises questions over trade agreements negotiated under IEEPA, despite Washington’s pledge to honour them. The EU has paused implementation, arguing a 15% blanket tariff breaches agreed levels. Yale’s Budget Lab estimates the shift trims the overall effective US tariff rate by two percentage points, with five-point reductions for China and Vietnam, no change for the EU, a five-point increase for the UK, and Brazil’s rate falling from 40%, while China’s effective rate remains near 40% due to existing 301 duties.

For shippers, the near-term impact appears uneven. Brazil may see frontloading, while modest reductions for China and Vietnam may prompt only limited pre-July activity. Political pressures, potential exemptions, and looming midterms could restrain broader import acceleration.

Written by: Farid Muzaffar