For Europe Inc, US tariff relief comes with a sting in the tail

By Elisa Anzolin, Christoph Steitz, Emma Rumney and Dominique Patton

MILAN/FRANKFURT/LONDON/PARIS, Feb 21 (Reuters) – The U.S. Supreme Court decision striking down the bulk of President Donald Trump’s trade tariffs, from European winemakers to chemical companies and distillers, brings a sting in the tail: an even more uncertain trade outlook.

In a decision that will have ripple effects on the global economy, the US Supreme Court has dealt the Republican president a bitter defeat by striking down sweeping tariffs imposed by Trump under a law intended to be used in national emergencies.

But while many businesses are rejoicing after protracted legal battles against the tariffs, European trade groups, companies and analysts worry the decision could further complicate trade relations following last year’s difficult trade deals.

“This decision risks creating a boomerang effect, creating further uncertainty and freezing orders while operators wait for a clearer regulatory framework,” said Paolo Castelletti, secretary general of the Italian wine association UIV.

The United States is the largest market for Italian wines, with exports of approximately 1.9 billion euros ($2.3 billion) in 2024, accounting for almost a quarter of Italy’s total wine shipments worldwide.

Many companies have warned that Trump would likely seek other means to impose similar tariffs, blunting the benefits of lower taxes and that the move could escalate tensions between the United States and its major trading partners. It will also be difficult to get a tariff refund.

Responding to the decision, Trump announced new global tariffs of 10% for an initial 150-day period and acknowledged that it was unclear if or when there would be any refunds.

‘A NEW ERA OF UNCERTAINTY’

Steve Ovara, chair of the International Trade Practice Group at law firm King & Spalding, said the companies his firm advises, from major U.S. manufacturers to consumer and technology groups, mostly expect any relief from tariffs to be short-lived.

“The biggest issue that everyone is going to be dealing with, at least in the short term, is some additional uncertainty,” he said.

Wolfgang Grosse Entrup, director general of VCI, the German chemical and pharmaceutical lobby that represents companies such as BASF, Bayer and Evonik, agrees.

“For our companies, this is not the beginning of a phase of stability, but a new period of uncertainty. Those who think this means the tariff dispute is over are mistaken,” he said. “New tariffs based on a different legal basis are always possible.”

Peter Sand, chief analyst at freight pricing platform Xeneta, said political risk remained for shippers and trends towards reducing risk in supply chains were “an irreversible trend”.

“The damage to many shippers’ supply chains is largely complete and unlikely to be undone,” he said.

NO ‘SILVER BULLET’ TO GET RID OF TARIFFS

FEBEA, the French cosmetics association of which companies such as L’Oreal are members, said it was “very cautious” about the decision and would monitor how the US government reacts, including potential new tariffs.

“We are all used to these ups and downs on tariffs,” said FEBEA secretary general Emmanuel Guichard.

Massimiliano Giansanti, president of Italian farmers’ group Confagricoltura, said the US decision “eliminates the entire legal basis” for Trump’s tariffs, but warned that it complicates matters precisely for exporters trying to comply with US tariffs.

“All of this creates deep instability at a time when we need certainty and are starting a process with our U.S. importers,” he said.

Irish Whiskey Association Director Eoin Ó ​Catháin said whiskey exporters in Ireland were waiting to see what happens next before taking action, adding that political negotiations and de-escalation were more likely to resolve tariff challenges.

“This is not a silver bullet to get rid of tariffs,” he said. “This is just another complication, another twist in the story.”

($1 = 0.8490 euros)

(Reporting by Elisa Anzolin, Christoph Steitz, Emma Rumney; Additional reporting by Dominique Patton and Stine Jacobsen; Writing by Adam Jourdan; Editing by Nick Zieminski)