Appeals court allows US to maintain chem tariffs

HOUSTON (ICIS)–The US can maintain nearly all the plastic and chemical tariffs it imposed this year after an appeals court granted on Thursday the government’s request to stay the judgment of a lower court.

The stay will remain in place while the case is under consideration by the US Court of Appeals for the Federal Circuit.

Earlier, the US lost a judgment over its tariffs in the US Court of International Trade. That lower court ruled that the president exceeded its authority when it imposed tariffs under the International Emergency Economic Powers Act (IEEPA). These IEEPA tariffs included nearly all of the duties that the US imposed in 2025 on imports of commodity plastics and chemicals.

Had the appeals court rejected the government’s request for a stay, then the US would have had 10 calendar days to withdraw the tariffs it imposed under IEEPA. The tariffs covered by the ruling include the following:

• The 10% baseline tariffs against most of the world that the US issued during its so-called Liberation Day event on 2 April. These include the reciprocal tariffs that were later paused. The US issued the tariffs under Executive Order 14257, which intended to address the nation’s trade deficit.
• The tariffs that the US initially imposed on imports from Canada under Executive Order 14193. These were intended to address drug smuggling. The US later limited the scope of these tariffs to cover imported goods that do not comply with the nations’ trade agreement, known as the US-Mexico-Canada Agreement (USMCA).
• The tariffs that the US initially imposed on imports from Mexico under Executive Order 14194. These were intended to address illegal immigration and drug smuggling. Like the Canadian tariffs, these were later limited to cover imported goods that did not comply with the USMCA.
• The 20% tariffs that the US imposed on imports from China under Executive Order 14195, which was intended to address drug smuggling.

Because the appeals court granted the government’s request for a stay, the US can maintain the IEEPA tariffs.

The ruling did not cover sectoral tariffs imposed on specific products like steel, aluminium and auto parts, and it does not cover the duties that the US imposed on Chinese imports during the first term of US President Donald Trump.

IMPLICATIONS OF THE RULING
If the ruling is upheld by the higher courts, it could bring some imports of plastics and chemicals back to the US while lowering costs of other products.

While the US has large surpluses in many plastics and chemicals, it still imports several key commodities.

US states that border Canada import large amounts of polyethylene (PE) and other plastics from that country because it is closer than the nation’s chemical hubs along the Gulf Coast.

Other significant imports include base oils, ammonia, polyethylene terephthalate (PET), methylene diphenyl diisocyanate (MDI), methanol and aromatics such as benzene, toluene and mixed xylenes (MX).

RULING COULD REDIRECT CHINESE EXPORTS OF PLASTIC PRODUCTS
The IEEPA tariffs of the US caused countries to redirect exports of plastics and chemicals to other markets, particularly to Europe. The result depressed prices for those plastics and chemicals. If the ruling holds, some of those exports could return to the US and reduce the quantity of exports arriving in Europe.

The IEEPA tariffs had a similar effect on the plastic products exports by China. Those exports were redirected to other countries, especially southeast Asia. These redirected shipments flooded those countries with plastic goods, displacing local products and lowering domestic demand for the plastics used to make those products.

If the ruling is restored by higher courts, then it could direct many of those shipments back to the US, although they would unlikely affect shipments of auto parts. Those shipments are covered by the sectoral tariffs, and the court ruling did not void those tariffs.

RULING REMOVES BASIS FOR RETALIATORY TARIFFS AGAINST US PLASTICS, CHEMS
China had already imposed blanket tariffs in retaliation to the IEEPA tariffs the US imposed on its exports. China unofficially granted waivers for US imports of ethane and PE, but those for liquefied petroleum gas (LPG) were still covered by the duty.

China relies on such imports as feedstock for its large fleet of propane dehydrogenation (PDH) units, which produce on-purpose propylene.

If upheld, the ruling could restore many of those exports and improve propylene margins for those PDH units.

The EU was preparing to impose retaliatory tariffs on exports of nearly every major commodity plastic from the US. Other proposals would cover EU imports of oleochemicals, tall oil, caustic soda and surfactants from the US.

Canada also prepared a list of retaliatory tariffs that covered US imports of PE, polypropylene (PP) and other plastics, chemicals and fertilizers.
If the ruling holds, it would remove the basis for the proposed tariffs of Canada and the EU as well as the existing ones already imposed by China.

RULING WOULD NOT ELIMINATE THREAT OF FUTURE TARIFFS
Even if the higher courts uphold the ruling and bars tariffs under IEEPA, the US has other means to impose duties that are outside of the bounds of the ruling.

• Section 122 of the Trade Act of 1974. Such tariffs would be limited to 15%, could last for 150 days and address balance of payment deficits. Tariffs imposed under the following statutes would require federal investigations, which could delay them by several months.
• Section 338 of the Tariff Act of 1930. The president can impose tariffs of up to 50% against countries that discriminate against US commerce.
• Section 301 of the Trade Act of 1974, which addresses unfair trade practices. This was the basis on the tariffs imposed on many Chinese imports during the peak of the trade war between the two countries.
• Section 232 of the Trade Expansion Act of 1962, which addresses imports with implications for national security. Trump used this provision to impose tariffs on steel and aluminum.

The US has started Section 232 on the following imports:

• Pharmaceutical and active pharmaceutical ingredient (APIs) – Section 232
• Semiconductors and semiconductor manufacturing equipment – Section 232
• Medium and heavy-duty trucks, parts – Section 232
• Critical minerals – Section 232
• Copper – Section 232
• Timber and lumber – Section 232
• Commercial aircraft and jet engines – Section 232
• Ship-to-shore cranes assembled in China or made with parts from China – Section 301
• Shipbuilding – Section 301

The case number for the appeal is 2025-1812.

The original lawsuit was filed in the US Court of International Trade by the plaintiffs VOS Selections, Genova Pipe, Microkits, FishUSA and Terry Precision Cycling. The case number is 25-cv-00066.

Thumbnail Photo: A container ship, which transports goods overseas. (Image by Costfoto/NurPhoto/Shutterstock)

Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy