What does the US tariff ruling mean for European F&B summary
- Supreme Court limits presidential tariff powers, creating short‑term relief and uncertainty
- European F&B exporters may regain competitiveness but face shifting consumer habits
- Importers may pursue legal challenges, though rebate prospects remain highly uncertain
- Supply chains stay volatile as Chinese packaging flows potentially shift again
- Trump uses alternative trade laws, signalling continued tariff risks for Europe
On Friday, the US Supreme Court ruled that tariffs put in place under the US’s International Emergency Economic Powers Act (IEEPA), which allows the President to enact them without consulting congress, exceed Presidential authority.
The ruling not only means that US President Donald Trump can no longer impose tariffs of his own volition – it also means that many of the tariffs already imposed under the act are now open for contestation.
Such a ruling is bound to have an impact worldwide, especially coming from an economy as powerful as the US.
But for food businesses, uncertainty remains. There are many signs to indicate that the ruling does not mean the end of the US policy on tariffs.
Short-term relief, long-term uncertainty
Many European food and beverage products were affected by US tariffs – both through flat rates on countries and goods-specific tariffs, like those on canned drinks.
Following the ruling, however, the US President’s ability to swiftly impose tariffs without congressional approval has been partially curtailed. This may have a positive impact on the ability of European food companies to operate in the US.
“On paper, European producers could regain margin and price competitiveness in the US market,” says Simon Geale, executive vice president at supply chain consultancy Proxima. However, this won’t be easy.
“This would most likely show itself as a correction rather than a surge in new business. These brands are also fighting against consumer habits, which may have changed a little in the interim, so they could well come up short in terms of volumes and revenue.”
In some cases, the impact of the ruling may even be negative for Europe. For example, Chinese food packaging materials, which had been sold in the EU to avoid US tariffs, may now return to the US, suggests Cyrille Filott, global strategist for consumer foods, packaging and logistics at Rabobank.
Will companies get any money back?
Will European companies get rebates for what they’ve already paid, now that these tariffs have been deemed to have exceeded presidential authority?
It certainly opens the US government up to lawsuits from businesses, who will no doubt argue that the tariffs were never legal in the first place.
However, rebates are by no means certain, suggests Proxima’s Geale. More to the point, it will be the operator who actually paid the tariff – in most cases, the importer – who would be entitled to a rebate if one was given, despite the cost often being passed down to other parties.
“All parties may feel aggrieved, but for the producer it’s going to depend on what was contractually agreed with the importer if indeed they are not the importer themselves.
“In the case where duties are reimbursed by the supplier or there are specific tariff adjustment clauses the producer may have some rights to recompense.”
The supply chain chaos is far from over, Geale stresses. “Businesses should continue to design for volatility. The rewiring of supply chains continues.”
Tariffs are here to stay
Despite the short-term relief that the ruling may bring to many European companies, tariffs may continue to put pressure on business.
That is, at least, the view of Thijs Geijer, sector economist for food and agriculture at ING Bank.
“Tariffs are here to stay, one way or another. Tariff-related uncertainty for food exporters remains high.”
When it comes to tariffs, the ruling “dismantles the legal scaffolding, not the building itself”, according to ING Bank’s global head of macro Carsten Brzeski and junior economist for global trade Julian Geib.
While the ruling prevents President Trump from enacting tariffs using the IEEPA, it does not stop him from using other legal methods. And there are multiple tools in his arsenal, explain Geib and Brzeski.
In fact, since the ruling President Trump has already implemented global tariffs of 10% under section 122 of the Trade Act of 1974, which allows him to bypass congressional approval (although there are still some constraints on this, such as a 150-day time limit unless it is extended by Congress).
With a wide legal arsenal at his disposal, argue Geib and Brzeski, Trump is unlikely to be deterred from his tariff policy by the current ruling.
The Supreme Court’s Decision, coupled with the threat of further tariffs, means that European businesses are uncertain whether to pursue their plans.
Some European businesses were considering building a business in the US to avoid tariffs, explains Rabobank’s Filott. Now, there is simply more uncertainty over what future tariffs, if implemented, will actually look like.
