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In a dramatic response to a Supreme Court ruling that invalidated much of his administration’s global tariff strategy, US President Donald Trump has announced a new 10% tariff on imports from nearly all countries. The President, describing the ruling as “terrible”, expressed his disdain for the justices involved, branding them “fools” and suggesting that the decision reflects a betrayal of his trade agenda.
Supreme Court Decision and Its Implications
The Supreme Court’s 6-3 ruling represented a significant setback for Trump’s trade policy, declaring that the President had exceeded his constitutional authority when imposing tariffs on foreign goods. This landmark decision could open the floodgates for businesses and states to claim refunds amounting to billions of dollars, significantly altering the financial landscape for many companies affected by the tariffs.
The court’s decision was rooted in arguments presented by various states and small businesses, which contended that the law Trump invoked to justify the tariffs—the International Emergency Economic Powers Act (IEEPA)—did not explicitly grant the President the authority to impose such duties. Chief Justice John Roberts, writing for the majority, emphasised that Congress has historically delegated tariff powers in clear and limited terms. He noted, “Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly.”
Trump’s New Tariff Strategy
Following the Supreme Court’s ruling, Trump swiftly signed a proclamation to enforce a new 10% tariff set to take effect on February 24, using a lesser-known provision known as Section 122. This law allows the imposition of tariffs for up to 150 days, after which Congress must intervene. The proclamation outlines various exemptions, including specific agricultural products and certain electronics, but the details of these exemptions remain vague, leaving businesses uncertain.
Moreover, the new tariff will apply broadly, impacting countries that previously negotiated lower rates with the US, including allies like the UK, India, and member states of the European Union. A White House official indicated that the administration expects these nations to continue adhering to existing trade agreements despite the imposition of the new tariffs.
Business Community Response
The reaction among the business community has been mixed. Following the Supreme Court ruling, markets responded positively, with the S&P 500 rising approximately 0.7%. Some business owners expressed relief at the court’s decision, characterising the previous tariffs as a heavy burden. Beth Benike, who operates a manufacturing business, articulated her feelings of liberation, while Nik Holm, CEO of a cycling company involved in the litigation, called the ruling a “relief.”
However, the prospect of obtaining refunds for tariffs already paid is uncertain. Analysts warn that the legal battles ahead could complicate the process, particularly for smaller firms that may struggle with the financial implications of prolonged litigation. Diane Swonk, chief economist at KPMG, advised caution, suggesting that businesses should temper their expectations for swift relief.
Future of US Trade Policy
As the Trump administration explores alternative legal avenues to sustain its tariff policies, it raises questions about the long-term direction of US trade relations. The administration is expected to consider other legal frameworks, such as Section 232 and Section 301, to address perceived threats to national security and unfair trade practices.
Geoffrey Gertz, a senior fellow at the Center for a New American Security, noted that the already complex trade environment has become even more convoluted following the court’s ruling. The muted response from major trading partners suggests a careful approach as they assess their next steps in light of the evolving US trade landscape.
Why it Matters
The implications of this ruling and Trump’s subsequent tariff announcement extend beyond immediate economic concerns. This latest chapter in US trade policy highlights the ongoing tensions between executive power and legislative authority, with potential ramifications for international trade relations and the global economy. As businesses brace for the fallout and seek clarification on their legal standing, the situation underscores the precarious nature of trade policy in the face of shifting judicial and political landscapes. The coming months will reveal whether Trump’s strategy can withstand judicial scrutiny while still fulfilling his administration’s ambitions for American manufacturing and investment.