Shifting Gears: Tariff Legal Battles, Transpacific Pressure & Trucking Reform

Tariffs on Trial: Legal Uncertainty & Policy Whiplash Continue

The legal battle over the Trump Administration’s “Liberation Day” tariffs escalated rapidly last week:

• The U.S. Court of International Trade temporarily enjoined a portion of the Trump Administration’s tariff package, specifically 6.7 percentage points of levies imposed earlier this year.
• The Court of Appeals for the Federal Circuit granted an emergency stay, reinstating the contested duties pending further review.

Though seen by some as a rebuke of Trump’s trade agenda, many viewed the court’s findings as procedurally narrow, analytically fragile, and ultimately unlikely to withstand appellate scrutiny.

The decision, which sided with a coalition of small importers and several Democratic-led states, challenged the legal basis under which President Trump acted—namely, the emergency authority provisions historically granted to the Executive Branch in matters implicating national economic security. 

While the court framed its ruling as a check on executive overreach, its analysis appears to lack the rigor and contextual understanding demonstrated by the President’s trade and legal teams, who based their actions on a well-founded reading of national trade statutes.

Notably, the administration retains multiple statutory pathways for imposing tariffs. Section 232 of the Trade Expansion Act, for example, provides for tariffs on imports that threaten national security—an authority previously upheld in both domestic and international legal forums. Similarly, Sections 122 and 301 remain available to the Executive Branch, affording additional flexibility and legal grounding to restore tariff structures swiftly and lawfully.

Market analysts, including those at Goldman Sachs, view the back-and-forth as unlikely to have material long-term consequences. The revenue impact, estimated at nearly $200 billion annually, can be recovered through restructured tariffs under alternative statutory authorities. Moreover, this revenue was never formally incorporated into congressional budgetary offsets, limiting fiscal reverberations.

The decision reflects more of a procedural pause than a policy reversal. For now, importers remain in limbo, juggling tariff costs while awaiting clarity from a full appellate review.

Surging Transpacific Rates Reflect Capacity Constraints & Shipper Anxiety

Containerized freight rates on the Asia-U.S. lanes are experiencing a notable spike as ocean carriers capitalize on the current lull in U.S.-China tariff tensions to implement aggressive spot rate hikes. The temporary relaxation of tariff measures has triggered a surge in demand from shippers rushing to move goods ahead of potential trade policy reversals. 

“Fear and uncertainty remain dominant forces in global logistics. Shippers are reacting not just to policy signals but to the perception of looming disruption—and they’re willing to pay a premium to ensure cargo flow.” - Xeneta Chief Analyst Peter Sand. 

As of the week ending May 23:

• Average spot rates from the Far East to the U.S. West Coast jumped to $3,000 per forty-foot equivalent unit (FEU), up from $2,722 the previous week. 
• Rates to the U.S. East Coast also increased to $4,069 per FEU, up from $3,883. 
• For shippers paying toward the upper end of the market (75th percentile), rates reached $3,200 and $4,250, respectively, on the same lanes.

Ocean carriers, anticipating further price elasticity, are pushing for more significant increases as of June 1. "Diamond Tier" service offerings–premium rate structures that guarantee space–are reemerging as a strategic tool, especially for time-sensitive shipments.

These rate movements follow recent capacity reductions during the earlier phase of the 145% tariff implementation, when lower demand prompted carriers to reallocate vessels away from the trans-Pacific temporarily. 

Sand cautions, however, that shippers should challenge rate narratives during contract talks: “Is the price surge rooted in genuine capacity shortages, or in market psychology? Likely both. Carriers face lead times when re-deploying capacity, so we expect a temporary rate peak through early to mid-June, followed by some easing as vessel availability improves.”

The current rate climate underscores the delicate balance in global trade: while supply-side constraints are real, pricing is increasingly driven by expectation management and risk hedging behaviors from shippers. Strategic procurement decisions over the next 4-6 weeks will be crucial to maintaining cost control and ensuring service reliability as trade flows return to normal.

Reinforcing Trucking Standards for Industry Stability & Public Safety

The U.S. trucking sector has been mired in a historic downturn since March 2022, a period now referred to as the Great Freight Recession. 

While soft demand for goods has played a role, the far more critical issue is unchecked overcapacity. This imbalance has destabilized freight pricing and led to a wave of carrier bankruptcies across the nation.

What Caused It:

• This oversupply largely stems from the pandemic-era surge in new market entrants.
• Stimulus programs, inflated spot rates, and easy access to credit encouraged a flood of inexperienced operators and undercapitalized carriers. 
• To cut costs and stay afloat, many small fleets hired undocumented drivers, often at the expense of safety, compliance, and industry standards.

The Impact:

A troubling byproduct of this shift has been the proliferation of commercial drivers lacking proper licensure, experience, and English proficiency. 

• In some states, foreign-issued CDLs were accepted with minimal or no validation of prior driving experience, despite the apparent risks of placing underqualified individuals behind the wheel of 40-ton trucks on U.S. highways. 
• Many of these drivers lacked the English language skills necessary for safety communication, regulatory compliance, and emergency response–core requirements for operating safely in a complex, rules-based freight environment.

This erosion of standards not only undermined the integrity of the labor market but also placed downward pressure on wages for documented, professional drivers, forcing compliant operators into untenable financial positions. Worse, it introduced a significant risk to road safety, contributing to a rise in fatal accidents involving heavy-duty trucks.

In 2023, 5,375 large trucks were involved in a fatal crash, an 8.4% decrease from 2022 but a 43% increase in the last 10 years.

There is clear justification for the Trump administration’s push to reinstate and enforce long-standing requirements regarding documentation, CDL validation, and English language proficiency. Allowing unqualified individuals to operate commercial vehicles not only endangers lives but also distorts the freight market by artificially sustaining low-cost capacity that honest carriers cannot compete against.

Empowering the Department of Transportation to place non-compliant drivers out of service is a necessary correction. By reestablishing a baseline of professionalism and accountability within the driver workforce, these policies will help rebalance capacity, raise safety standards, and support the recovery of a battered yet vital industry.