For Europe Inc, US tariff relief brings unexpected trade uncertainty

From European winemakers to chemical companies and distillers, the US Supreme Court ruling striking down a large part of President Donald Trump's trade tariffs brings an added sting: a more uncertain trade outlook.

 

In a decision set to ripple through the global economy, the top US court invalidated Trump's sweeping tariffs imposed under a law meant for national emergencies, delivering a sharp defeat to the Republican president.

 

While many businesses welcomed the end of lengthy legal battles over the tariffs, European trade groups, companies, and analysts warned the ruling may complicate trade relations further after last year’s hard-fought agreements.

 

 

"This ruling ... risks creating a boomerang effect, producing further uncertainty and a freeze on orders while operators wait for a clearer regulatory framework," said Paolo Castelletti, secretary general of Italian wine association UIV. The US is Italy’s top wine market, with exports of 1.9 billion euros ($2.3 billion) in 2024, nearly a quarter of Italy’s total global wine shipments.

 

Many firms cautioned that Trump could pursue other avenues to impose similar tariffs, reducing the benefit of lower levies, while tariff refunds are likely to be difficult to obtain. In response, Trump announced new global tariffs of 10 per cent for an initial 150-day period, acknowledging uncertainty over if or when any refunds would be issued.

 

Steve Ovara, chair of the International Trade Practice Group at law firm King & Spalding, said that companies—from large US manufacturers to consumer and technology groups—mostly expected relief from tariffs to be short-lived. "The major issue everybody's going to be dealing with for at least the short term is some additional uncertainty," he said.

 

Wolfgang Grosse Entrup, managing director of German chemicals and pharmaceutical lobby VCI, which represents firms including BASF, Bayer, and Evonik, agreed: "For our firms, this isn't the start of a phase of stability, but a new round of uncertainty. Anyone who believes this means the tariff conflict is over is mistaken. New tariffs based on a different legal basis are possible at any time."

 

Peter Sand, chief analyst at freight pricing platform Xeneta, added that political risk remains for shippers, and the trend to de-risk supply chains is "irreversible." "The damage to many shippers' supply chains is largely done and probably won't be undone," he said.

 

French cosmetics association FEBEA, whose members include L’Oréal, described the ruling cautiously and said it would monitor the US government’s response, including possible new tariffs.

 

Massimiliano Giansanti, president of Italian farmers’ group Confagricoltura, said the US decision "dismantles the entire legal basis" for Trump’s tariffs but warned it complicates matters for exporters who were just adapting.

 

In Ireland, whiskey exporters are waiting to see what happens next before taking action, said Eoin Ó Catháin, director of the Irish Whiskey Association. "This isn’t a silver bullet to get rid of tariffs," he said. "This is just another complication, it’s another twist in the story." 

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