Tariff ruling limits Trump’s leverage but won’t end uncertainty for trade partners
Trump responded to Friday’s decision within hours, imposing a new 10% tariff on all imports and ordering new trade investigations that could lead to additional tariffs within months, while insisting that trade and investment agreements reached with about 20 countries, most with higher tariffs, remain untouched. Less than 24 hours later, it raised the rate of the new tariff to 15%, the maximum level allowed by law.
Wendy Cutler, a former U.S. trade official and senior vice president of the Asia Society Policy Institute, said Trump’s rapid shift is emblematic of the president’s desire and ability to keep trading partners on their toes. “For him, the uncertainty gives him a tremendous additional advantage beyond the actual tariffs. Because people are worried about what he’s going to do.”
But Cutler and other trade experts agree that Trump’s wings have been clipped. The 10 percent renewal tariff lasts only 150 days, and new tariffs imposed under other laws will take longer to implement; That would strip the president of the “anytime, anywhere, for any reason” stick he used to impose tariffs before using the International Emergency Economic Powers Act.
“He lost his favorite tool,” Cutler said. “He has lost the ability to present a credible threat, especially on foreign policy issues and issues that bother him in other countries that have nothing to do with trade.”
William Reinsch, a former senior U.S. government official who now serves at the Center for Strategic and International Studies, said the Supreme Court’s decisive 6-3 decision reduces Trump’s ability to threaten other countries.
Although the economic impact is limited, the 10% tariff and other duties expected in the coming months are expected to replace some, but not all, of the tariffs now considered illegal. Michael Froman, president of the Council on Foreign Relations, said the decision and the administration’s response leave many questions unanswered, including how importers can get refunds for illegally collected tariffs and what other tariffs are coming. “Perhaps the most important impact of the Supreme Court’s decision is that it should reduce the threat or use of tariffs as the president’s preferred form of pressure or punishment outside the trade arena,” said Froman, who served as former President Barack Obama’s chief trade negotiator from 2013 to 2017.
This development could provide relief to countries hurt by Trump’s unpredictability and repeated use of tariff threats to punish them on non-trade issues, extract concessions and secure foreign investment. The U.S. president had invoked IEEPA to impose tariffs on a range of non-trade issues, leaving countries bruised and skittish and increasing uncertainty for companies around the world. He has threatened tariffs on European countries that dispute his claims to Greenland, Canada for allowing electric vehicle imports from China, and Brazil over its treatment of far-right former President Jair Bolsonaro, a Trump ally.
NO MORE ‘COMMERCIAL BAZOUKA’
Josh Lipsky, director of international economics at the Atlantic Council, cautioned that it was too early to predict the impact of the Supreme Court’s decision on Trump’s influence, given uncertainty about new tariffs and the president’s willingness to use a range of tools.
“This is a significant blow to the international economic trade agenda. It is not necessarily a crippling blow because of other authorities, but we need to see how these will play out in practice,” he said. “Despite IEEPA, the ‘tariff armada’ appears to have come to the rescue. But how this will play out in terms of leverage is a different question in the coming months.”
It is also unclear what will happen to the nearly 20 framework agreements or tighter trade agreements the Trump administration has reached with countries in recent months, based on IEEPA tariff threats.
Trump, U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent insisted Friday that the agreements remain in place even if those rates are higher than the temporary universal tax.
Analysts said they were skeptical that countries might try to terminate or renegotiate the agreements for fear of triggering Trump’s anger. Miriam Sapiro, a former top U.S. trade official and assistant professor of international and public affairs at Columbia University, said Trump may have lost his “trade bazooka” but does not expect existing deals to unravel. But Sapiro said the decision could give countries more leverage in new or ongoing negotiations with the Trump administration.
“There will still be interest in making deals because of the uncertainty and the desire to keep the United States a strong ally and a strong partner,” he said. “But countries have a little more bargaining power than they felt before.” He said from Trump’s perspective, using IEEPA is a risk he’s willing to take because it helps close some trade deals quickly, but in some cases the details still need to be worked out and enforcement could be challenging.
Greer told Fox News’ “Special Report” that IEEPA was the appropriate tool at the time, given Trump’s desire to act quickly and flexibly, saying it helped open market access for U.S. firms. “We have no regrets,” he said. “We’ll just use a different vehicle.”
While countries were evaluating the Supreme Court decision, the first reactions from abroad were measured. South Korea said it would review the decision and the U.S. response and plans to continue “friendly” talks on implementing a tariff deal that resulted in a promise of $350 billion in investment in November. Tom Ramage, an economic policy analyst at the Korean American Economic Institute, said the Trump administration’s continued implementation of other tariff measures would likely persuade South Korea and its companies to maintain their commitments.
“Anything less could increase the likelihood of further retaliation from the president, especially if the administration seeks to set an example for countries seeking to withdraw from negotiated agreements,” KEI wrote on its website.
