In a bold move that underscores his contentious trade policy, Donald Trump announced on Saturday his decision to raise tariffs on all imports to the United States from 10% to 15%. This announcement came less than 24 hours after the US Supreme Court ruled against his previous tariff strategy, which had been deemed an overreach of authority. The President’s latest action, executed under a different legal framework, is set to exacerbate existing trade tensions and could have significant implications for both domestic and international markets.
Supreme Court Ruling and Immediate Fallout
On Friday, the Supreme Court delivered a ruling that struck down Trump’s use of tariffs under the International Emergency Economic Powers Act (IEEPA), asserting that he had overstepped his presidential authority. The court’s decision was met with fierce criticism from Trump, who labelled the justices as a “disgrace to the nation.”
In a subsequent post on Truth Social, Trump declared the immediate implementation of a new 15% tariff, citing the need to address what he described as decades of trade injustices against the United States. “I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been ‘ripping’ the U.S. off for decades,” he stated.
Legal Framework and Potential Challenges
The tariff increase is permissible under section 122 of the Trade Act of 1974, which has rarely been invoked. This law allows the President to impose tariffs of up to 15% for a period of 150 days without requiring congressional approval. However, after this timeframe, the administration must seek legislative consent to maintain or adjust the tariffs. Trump’s administration has indicated that it plans to formulate new tariffs that will comply with legal standards during this period.
Despite the President’s claims of immediate effect, it remains uncertain whether all necessary documentation has been finalised. A fact sheet released by the White House indicated that the original 10% tariffs were scheduled to commence on 24 February at 12:01 am ET.
Global Reaction and Economic Implications
International leaders have expressed concern regarding the unpredictability introduced by Trump’s tariff policy. German Chancellor Friedrich Merz announced plans to visit Washington with a united European stance, warning of the “poison” that trade uncertainty brings to economies on both sides of the Atlantic. He remarked, “The biggest poison for the economies of Europe and the US is this constant uncertainty about tariffs,” emphasising the need for a resolution.
French President Emmanuel Macron echoed similar sentiments, acknowledging the importance of judicial oversight within a democracy. He stated, “It is good to have power and counterweights to power in democracies,” while stressing that unilateral tariff decisions could lead to reciprocal actions, further destabilising trade relationships.
The 15% tariff increase also raises questions for nations such as the UK, which had previously agreed to a 10% tariff with the US. William Bain, head of trade policy at the British Chamber of Commerce, cautioned that the hike would adversely affect trade and consumer prices, asserting, “Businesses on both sides of the Atlantic need a period of clarity and certainty.”
Exemptions and Ongoing Tensions
While the new tariffs are extensive, certain products will be exempt, including critical minerals, metals, and pharmaceuticals, as well as goods compliant with the United States-Mexico-Canada Agreement (USMCA). However, the Supreme Court’s ruling does not affect separate industry-specific tariffs imposed on steel, aluminium, lumber, and automobiles, which remain in force.
Trump’s aggressive tariff strategy is part of his broader aim to bolster US manufacturing. Recent data indicates that the US has collected approximately $130 billion in tariffs through the IEEPA, although studies reveal that a staggering 90% of this burden has fallen on US businesses and consumers. Calls for refunds from companies affected by the tariffs have already begun, but the President has warned that any reimbursements will lead to prolonged legal disputes.
In a continuation of his criticism, Trump lambasted the Supreme Court’s decision, labelling it “ridiculous” and “extraordinarily anti-American.” He expressed disappointment towards specific justices, including two of his own appointees, Amy Coney Barrett and Neil Gorsuch, whom he accused of betraying their constitutional duties.
Why it Matters
Trump’s tariff increase not only reflects his ongoing commitment to an aggressive trade policy but also highlights the deep divisions within the US judicial and political landscape. As the administration navigates this complex legal terrain, the ramifications of these tariffs could ripple across global markets, potentially igniting retaliatory measures from other countries and further complicating international trade relations. The volatility introduced by such unilateral decisions serves as a reminder of the delicate balance between national policy and global economic stability, leaving many to ponder the long-term impacts on both American consumers and international partners.