Uncertainty persists for Minnesota farmers, businesses as courts toggle tariffs

WASHINGTON — Uncertainty buffeted Minnesota business owners Thursday as the Trump administration’s on-again, off-again tariff program experienced its latest turbulence in the courts.

A day after the U.S. Court of International Trade ruled that many of President Donald Trump’s tariffs are illegal, a federal appeals court handed the administration a victory by pausing that injunction.

In Minnesota, where the domestic and foreign import taxes have sunk farmers’ prospects and rattled supply chains, Thursday’s whiplash only underscored why some firms remained relatively muted.

The trade court’s ruling Wednesday sent shock waves across global economies, finding the administration had wrongly used authority under a 1970 law to impose sweeping tariffs on countries, including major trading partners like China, Canada and Mexico.

But on Thursday afternoon, the U.S. Court of Appeals paused the ruling while an appeal is considered, triggering uncertainty and caution among business owners.

Beth Fynbo Benike, who founded Oronoco, Minn.-based Busy Baby and has become something of an ambassador for tariff tumult in the state, said her small business is stuck in limbo.

Although Wednesday night’s decision brought some comfort, she said, appeals might ultimately take the case to the Supreme Court before the outcome is known.

Yet when her cargo ship of goods arrives from China in July, Benike said, “I am still going to have to pay tariffs on it unless the Supreme Court rules otherwise.”

A number of companies approached by the Minnesota Star Tribune did not respond or declined to comment, citing, in the words of one agribusiness, the “fluid nature of global trade and tariffs.”

Judges appointed to the trade court by Presidents Ronald Reagan, Barack Obama and Trump during his first term ruled that the Trump administration could not use the International Emergency Economic Powers Act of 1977 to slap across-the-board tariffs on nations around the globe.

The ruling did not block all of Trump’s import taxes, including targeted tariffs on steel and aluminum, or on foreign vehicles, which were imposed using a separate legal authority.

The ruling gave the administration 10 days to stop the collection and to appeal.

No, not for now. The administration immediately appealed the ruling to the federal appeals court, which temporarily reinstated the tariffs while it considers the case itself.

Before the appeals court froze the lower court’s decision, the trade court struck down a 30% tariff on goods from China, as well as the 25% tariff on goods from Canada and Mexico. A baseline tariff of 10% for goods from other nations across the globe was also blocked.

Many countries are reportedly negotiating with the U.S. ahead of a July 8 deadline when a 90-day pause on tariffs issued by Trump in April expires.

Minnesota’s top exports are agricultural products, including wheat, corn and soybeans. Its ag exports annually surpass $10 billion in value, and crop farmers estimate 1 in 4 rows of soybeans planted in Minnesota ends up in China. Canada and Mexico are major purchasers of U.S. grown commodities, as well.

While Trump’s tariffs apply to imports, they have spurred reciprocal retaliatory tariffs by foreign nations, such as China, against U.S. farm goods.

Before the trade court’s ruling was stayed, Minnesota Agriculture Commissioner Thom Petersen had called it “welcome news.”

“We’ve worked hard ... to establish strong relationships with these countries,” he said.

The price of soybeans rose slightly during trading on Thursday.

For the more than 500,000 small businesses in the state, the U.S.-initiated trade war has upended supply chains and, for many, sent the cost of importing Chinese goods skyrocketing.

Neil Marriott, owner of My Cable Mart in Eden Prairie, said the trade court’s ruling would not have been enough to persuade him to put in his usual autumn order for $130,000 worth of TV mounts and cables from China.

Marriott said he doesn’t know if a future court decision would allow Trump’s tariffs to remain in place during appeals, or if the administration would find another way to drive through the import taxes.

This week, a boatload of product arrived from China, he said, and My Cable paid the $60,000 in tariffs. That customs’ bill represented a 58.5% tariff, Marriott said. It included 25% from a 2018 Trump executive order and another 30% from the president’s most recent order. And it included 3.5% from Congress’s 1970-era tariffs.

Marriott said he hopes the trade court’s ruling ultimately prevails, which would entitle him to a refund. But “that could take months or years” and is such a long shot that his shipping logistics agent, C.H. Robinson, won’t even discuss it.

Busy Baby’s Benike said her company, maker of infant mats, had to let go its marketing and retail advising firms this week.

“We simply could not afford to pay them any more and we are looking at all our expenses to see what else we can cut,” Benike said. “We are figuring out how or if we can survive.”

When Trump raised tariffs on Chinese imports to 145% last month, Benike canceled her product shipments from China for eight weeks because she couldn’t afford the added cost.

Now Busy Baby is out of stock, just as it is due to refresh its inventory with new customers Walmart and Target.

A few weeks ago, Benike said, she reordered a shipment from China after Trump reduced Chinese tariffs from 145% to 30%. That shipment leaves in two days and is due to arrive in July.

Lauren Saidel-Baker, an economist for small-business research and consulting firm ITR Economics, said the trade court’s ruling added a new layer of uncertainty for Minnesota manufacturers, whose products make up 13% of the state’s gross domestic product.

In many cases, those products rely on imported parts and/or raw materials that are subject to import taxes.

“For manufacturers, removing these tariffs [would] at least in the short term, reduce the cost of some inputs and allow for a more efficient supply chain,” Saidel-Baker said.

But she noted the court ruling would not reverse the trend of dwindling foreign direct investment.

The Budget Lab at Yale University estimates that, at current tariff rates, U.S. households have lost an average of $950. But the cost for Minnesotans remains unclear, said Anthony Becker, the Minnesota State Economist.

“We simply do not have enough data on prices and employment in Minnesota to say,” Becker said.