“This simply adds to the chaos and mess,” said Carsten Brzeski, analyst at ING, referring to the rapidly changing tariff announcements and their effects on businesses. He warned that uncertainty has returned to levels seen last year and noted a higher risk of retaliatory measures by US trading partners, saying, “The risk of a real fully-fledged tariff war – trade war – escalation is clearly higher than last year.”
Tariff Implementation and Legal Background
The 10% levy was introduced through an executive order on Friday, citing Section 122 of the 1974 Trade Act, which permits the president to impose import duties for 150 days without congressional approval. The order described the measure as a step to “address fundamental international payments problems and continue the Administration's work to rebalance trade relationships to benefit American workers, farmers, and manufacturers.”
Trump has argued that tariffs are essential to reducing the US trade deficit, which recently reached roughly $1.2 trillion (£890bn), widening by 2.1% compared to 2024. The US has already collected at least $130 billion in tariffs under the International Emergency Economic Powers Act (IEEPA), according to official data.
However, last Friday, the Supreme Court ruled that Trump had exceeded his authority in using IEEPA to impose sweeping tariffs. The decision raised the possibility of billions in refunds to affected businesses. FedEx filed a lawsuit on Monday seeking a full refund for tariffs paid under IEEPA, while campaign group We Pay The Tariffs claims to represent over 900 US businesses demanding “full, fast, and automatic refunds of unlawful IEEPA tariffs.”
Supreme Court Justice Brett Kavanaugh noted that the refund process is likely to be “a mess,” and Trump described the court ruling as “ridiculous, poorly written, and extraordinarily anti-American,” vowing to fight the matter in court “for the next five years.”
Business Reactions: Relief and Continued Uncertainty
UK-based companies importing from China expressed cautious optimism. Fraser Smeaton, CEO of Morph Costumes, which produces costumes in China for export to the US, welcomed the lower 10% rate compared to previous expectations but highlighted ongoing uncertainty. “The fact that we’re at 10% rather than 20% is better than it was, but will it stay that way?” he said. His firm, like others, is pursuing refunds for IEEPA tariffs already paid.
Similarly, Daniel Graham, managing director of Birchall, noted that while the lower tariff is “good news,” the frequent policy changes complicate planning. Birchall, founded in 1872, imports tea from Africa and exports to countries including the US. Graham explained that the lower-cost nature of tea has made tariffs manageable, but higher rates could force the company to explore alternative markets.
International Repercussions and Trade Tensions
On Monday, Trump warned that higher tariffs could be imposed on countries that “play games” with trade deals, heightening global concern. Countries including the UK, EU, and India are monitoring the situation closely.
The UK indicated that reciprocal measures are possible if the US does not honor tariff agreements, while stressing that no one wants a trade war. The EU has paused ratification of a summer trade deal and requested clarity from the US, with Brando Benifei, chair of the European Parliament’s delegation for relations with the US, stating, “If we get worse conditions then we need to react… try to work a bit together. I think you should demand respect.” India also deferred previously scheduled talks to finalize a recent trade agreement.
Analysts Warn of Persistent Uncertainty
Experts have cautioned that the 10% rate may only provide temporary relief. Brzeski and other analysts note that unpredictable tariff policy could disrupt supply chains, investment decisions, and global trade flows. Businesses are now faced with navigating potential tariff refunds, shifting policy signals, and the risk of retaliatory measures from trading partners.
With tariffs officially in effect, ongoing litigation, and international scrutiny, US and global markets remain on alert for further developments, making the next months crucial for businesses and governments impacted by the evolving trade landscape.