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.
Comments