The Court found that the use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs exceeded the bounds of presidential authority.
While this represents a legal setback for the administration’s trade agenda, it does not mark the end of tariff risk. Other statutory tools – such as Section 122, 232 and 301 of US trade law – remain readily available and are already being deployed.
For Australian exporters, the ruling does not remove uncertainty so much as reshape it. The key question is not whether tariffs disappear, but how their form, duration and legal basis continue to evolve – and what that means for Australian businesses selling into the US market.
Immediate impacts on Australian exporters
Even ‘temporary’ tariffs have immediate and lasting commercial impacts. While US importers of record pay duties at the border, the economic burden rarely stops there. Tariff costs trickle down through the supply chain, placing downward pressure on margins and overall competitiveness. Australian exporters are increasingly expected to absorb part of the cost to remain price-competitive, renegotiate long-term supply arrangements, or risk losing market share to US-based or tariff-exempt suppliers. This dynamic is particularly evident in consumer-facing sectors, with swimwear and apparel exporters already passing tariff costs onto consumers and seeing shift quickly.
Instability has become a central problem. With the US administration shifting between legal bases for trade measures, Australian exporters face a moving target. Uncertainty around which tariff regime applies – and for how long – complicates landed cost calculations, limits the ability to lock in pricing, and creates hesitation around US market expansion or capital investment. Smaller exporters are disproportionately affected, as they often lack the scale or flexibility to rapidly adjust supply chains or production.
Compliance risk is also heightened. Fragmented tariff regimes mean that whether a product falls within the scope of Section 232 measures, qualifies for an exemption under Section 122, or becomes subject to a future Section 301 investigation, can be the difference between a 0 per cent, 10 per cent, 15 per cent, or even a 50 per cent tariff. Errors in harmonised system code (HS) classification, product descriptions, or origin documentation now carry direct financial consequences, turning what was once a compliance issue into a direct margin risk.
Shifts in competitiveness
The IEEPA regime often gave Australian goods lower tariffs than competitors from China, Europe and some emerging markets, making Australia the ‘cheaper’ option in many cases. With replacement tariffs under Section 122 effectively creating a 10 per cent global baseline, this advantage is largely removed. Australia may remain competitive in absolute terms, but its comparative edge is narrower.
Volatility further challenges competitiveness. Even temporary tariffs matter: US buyers place a premium on price certainty, and the post-IEEPA environment is characterised by overlapping and unstable measures, including temporary Section 122 tariffs (pending congressional approval), threatened increases, and pending Section 232 and Section 301 investigations. This uncertainty makes Australian exporters riskier for long-term US contracts compared with domestic or near-shore suppliers. Buyers are less willing to commit to volume, and exporters face pressure to absorb tariff risk in their pricing.
Australia also lacks protection from a US Free Trade Agreement (FTA). Section 122 and 232 tariffs apply regardless of existing trade agreements, leaving exporters exposed in much the same way as non-FTA partners, despite the border strength and bilateral relationship.
Strategic considerations
While businesses cannot control US trade policy, there are steps to reduce exposure and manage risk:
- Contractual clarity: Review contracts to ensure tariff risk is clearly allocated through incoterms, tariff pass-through clauses and price adjustment mechanisms.
- Product and market diversification: Reduce reliance on US sales by growing domestic revenue or expanding into Asia, Europe or the Middle East acting as a hedge against US volatility.
- Active monitoring: Trade investigations under Sections 232 and 301 are public and consultative. Early awareness allows submissions, industry engagement, and adjustments to supply strategies before tariffs crystallise.
- Customs as a strategic tool: Customs and classification audits should be treated as a commercial priority. Correct documentation and classification now directly protect margins and profitability.
The road ahead
The removal of IEEPA tariffs eliminates one legal pathway but doesn’t simplify trade into the US. The US market remains commercially attractive, given the scale – but the complexity, uncertainty and shifting nature of US tariffs requires robust pricing, contractual, and compliance strategies. Businesses that actively manage these risks will be best positioned to maintain competitiveness.
Understanding how these developments affect your organisation’s supply chains, pricing, and commercial strategy is critical. Reach out for tailored advice to help translate these changes into practical strategies that protect margins and maintain US market access.
Article contributed to by Jack Towers - Tax
