Supreme Court Ruling Sends Fresh Waves Through Shipping Markets

By Steven Ballerini | CEO of Australasian Supply Chain & Logistics Association (ASCLA)

In a landmark decision delivered on 20 February 2026, the United States Supreme Court ruled that President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping global tariffs in 2025 was unlawful. The Court found that the statute did not provide the President with authority to levy broad import tariffs – a power traditionally reserved for Congress.

The ruling represents a significant constitutional moment in U.S. trade policy. However, rather than resolving trade uncertainty, it has introduced a new layer of complexity for exporters, importers, and global shipping markets.

The Nature of IEEPA and Why It Was Introduced

The International Emergency Economic Powers Act (IEEPA) was enacted in 1977 at the height of the Cold War. Its core purpose was to equip the U.S. President with emergency authority to respond to external national security threats by regulating financial transactions, freezing assets, and restricting economic dealings with foreign actors. Over the decades, it has primarily served as the legal foundation for sanctions regimes – targeting hostile states, terrorist organisations, and designated individuals – rather than as a tool of mainstream trade policy.

It was not drafted as a broad tariff mechanism.

In early 2025, after returning to office, President Trump re-energised his protectionist trade agenda. Instead of relying on IEEPA, the administration operated through established trade statutes, most notably Section 301 of the Trade Act of 1974, addressing unfair trade practices, and Section 232, which permits tariffs on national security grounds. The White House expanded duties on selected imports, including higher tariffs on Chinese goods and renewed measures affecting steel, aluminium, and certain manufactured products. The stated objective was to narrow the U.S. trade deficit, bolster domestic manufacturing, address perceived trade imbalances, and shield strategically sensitive industries. These measures were framed as part of a broader industrial strategy aimed at reshoring production and strengthening supply chain resilience.

In reviewing the legal boundaries of executive authority, the Supreme Court’s majority made clear that IEEPA does not expressly grant tariff-imposing power and that decisions of this economic magnitude require clear congressional authorisation. The ruling reaffirmed the constitutional balance between the executive and legislative branches in shaping U.S. trade policy.

Will Excess Tariffs Be Refunded?

One of the most pressing commercial questions remains unanswered: Will the excess tariffs collected under IEEPA be refunded?

While the Court invalidated the legal basis for the tariffs, it did not order automatic reimbursement. That issue now sits with lower courts and administrative agencies. Businesses that paid tariffs as the importer of record may need to initiate claims, potentially through the U.S. Court of International Trade.

Estimates suggest that more than US $175 billion in tariff revenue was collected under the invalidated regime. Whether and how that money is returned remains uncertain. Legal experts have cautioned that the process could take years, and not all affected parties may recover funds.

For global supply chains, this ambiguity creates accounting complications. Companies must assess whether to provision for potential refunds, how to treat past tariff expenses, and how to manage contractual arrangements with customers and suppliers.

Impact on Australian Exporters

Australian exporters were not immune. Since the tariff adjustments in 2025, Australian goods entering the United States were subject to the baseline 10 percent levy, with some sector-specific measures layered on top.

Industry estimates suggest Australian exporters have paid approximately A$1.4 billion in additional duties since the measures were introduced. Sectors exposed include advanced manufacturing components, medical equipment, agricultural products, food and beverage exports, and specialised machinery.

For many exporters, margins were compressed or pricing strategies adjusted to maintain competitiveness in the U.S. market. The ruling may open a pathway to potential recovery of some of those funds, but only if a workable refund framework emerges.

In the meantime, exporters remain exposed to evolving U.S. trade policy settings.

Trump’s Immediate Response

President Trump moved quickly following the ruling. Within days, he announced new tariff measures under alternative statutory authorities, including Section 122 of the Trade Act of 1974. A temporary global tariff was reintroduced, initially at 10 percent and reportedly increased to 15 percent for a defined period while the administration considers more permanent mechanisms.

The pivot suggests the administration remains committed to maintaining tariff leverage as an economic and political tool. While the Supreme Court curtailed the use of IEEPA, it did not prevent tariffs under other legislative frameworks.

For Australian exporters, this means that although the legal theory underpinning last year’s tariffs has been rejected, exposure to U.S. trade barriers may persist in modified form. The practical outcome is continued uncertainty.

What This Means for Shipping Markets

From a logistics and shipping perspective, volatility is often more disruptive than the tariff itself.

When tariff regimes are introduced, withdrawn, and reintroduced under different authorities, importers adjust behaviour. We typically see front-loading of shipments before tariff increases, temporary slowdowns during legal disputes, and sudden shifts in sourcing strategies.

These behaviours translate directly into:

• Fluctuating container demand
• Spot rate volatility
• Changes in vessel utilisation
• Rerouting of cargo flows
• Inventory imbalances

Asian and European exporters have already begun recalibrating supply chains in response to the Court’s decision and the subsequent tariff announcements. Australian exporters are likely to adopt a similar cautious approach.

For shipping markets, this creates uneven demand patterns rather than stable growth. Freight forwarders and carriers must manage booking unpredictability, while ports may experience temporary surges followed by lulls.

In short, policy instability at the world’s largest consumer market reverberates across global maritime trade.

Broader Trade Implications

The ruling also carries a longer-term institutional signal. The Supreme Court has reinforced congressional primacy in tariff setting, which may limit the executive branch’s ability to rapidly deploy broad trade measures without clear statutory authority.

However, the practical impact will depend on how Congress responds and whether future administrations pursue more targeted tariff tools.

For Australia, the episode underscores the importance of diversification. While the United States remains a critical market, exporters may accelerate efforts to deepen trade relationships in Asia and Europe to reduce concentration risk.

The Final Word

The Supreme Court’s decision closes one legal chapter but opens several commercial ones.

Australian exporters face three realities. First, past tariff payments may be recoverable, but likely only through a complex and uncertain legal process. Second, new U.S. tariff measures may continue under alternative laws, meaning exposure has not disappeared. Third, the resulting policy volatility is likely to persist, placing pressure on supply chains and shipping markets.

For ASCLA members and the broader logistics community, the key lesson is clear. Trade policy risk is no longer a peripheral issue. It is a core operational variable that demands scenario planning, contractual clarity and agile supply chain management.

In an environment where legal rulings can reshape tariff regimes overnight, resilience and adaptability will define competitive advantage.