In a dramatic escalation of his trade agenda, Donald Trump has announced an increase in tariffs on US imports from all nations, raising the rate from 10% to 15%. This decision comes just a day after the Supreme Court ruled that his previous tariff implementation under the International Emergency Economic Powers Act (IEEPA) was beyond his authority, necessitating Congressional approval. Trump’s reaction to this setback has been vehement, as he publicly admonished the justices and vowed to employ a different legal mechanism to impose the new tariffs.
A Swift Response to Judicial Setbacks
On Saturday, Trump took to Truth Social to declare the new tariffs, expressing his frustration at the Supreme Court’s ruling and framing the increase as a necessary measure to protect American interests. He stated, “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, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level.”
This new tariff rate is sanctioned under Section 122 of the Trade Act of 1974, which grants the president the authority to impose tariffs of up to 15% for a period of 150 days. After this timeframe, any continuation of the tariffs will require Congressional approval. However, this path is fraught with potential legal challenges, and the administration faces an uphill battle in justifying its actions.
International Reactions and Implications
The international community has responded with caution and concern. German Chancellor Friedrich Merz announced his intent to coordinate a European response to Trump’s aggressive tariff policies, warning that the uncertainty surrounding tariffs could have detrimental consequences for both European and American economies. He remarked, “The biggest poison for the economies of Europe and the US is this constant uncertainty about tariffs. And this uncertainty must end.”
French President Emmanuel Macron echoed these sentiments, emphasising the importance of the rule of law in democracies. He suggested that France would need to assess the implications of these new tariffs, championing the principle of reciprocity rather than unilateral decisions imposed by the US.
The new tariff regime raises particularly pressing questions for countries like the UK, which had previously aligned with the US on a 10% tariff agreement. William Bain, head of trade policy at the British Chamber of Commerce, expressed concern over the potential negative impacts on trade, consumer prices, and overall economic growth. He stated, “Higher tariffs are not the way to achieve clarity and certainty.”
The Domestic Economic Landscape
While Trump’s administration has justified its tariffs as a means of revitalising American manufacturing, the practical implications tell a different story. Recent data reveals that US businesses and consumers have shouldered approximately 90% of the tariff burden, amounting to an estimated $130 billion collected through the IEEPA. Calls for refunds from business associations are growing, although Trump has indicated that any reimbursements would likely require lengthy legal proceedings.
Moreover, the Supreme Court’s ruling does not affect specific tariffs already imposed on steel, aluminium, lumber, and automotive products through different legal frameworks. These targeted levies remain in place, reflecting Trump’s ongoing commitment to his protectionist policies.
Throughout this tumultuous period, Trump has not held back in his criticisms of the Supreme Court. He labelled the 6-3 decision as “ridiculous, poorly written, and extraordinarily anti-American,” going so far as to express shame in certain justices for their lack of alignment with his policies. His remarks have sparked considerable controversy, particularly aimed at his own appointees, Justices Amy Coney Barrett and Neil Gorsuch.
Why it Matters
Trump’s latest tariff increase not only underscores the ongoing volatility in US trade policy but also highlights the deepening rift between the executive branch and the judicial system. As the administration seeks to navigate the complexities of international trade, the implications for global economic stability are significant. With businesses on both sides of the Atlantic clamouring for predictability, the move to impose new tariffs further complicates an already precarious economic landscape, potentially leading to retaliatory measures and a spiral of escalating trade tensions. As the world watches, the stakes have never been higher for both American consumers and international partners.
