The US Supreme Court’s recent ruling, which declared most of President Trump’s tariffs illegal, is causing a stir among global trade partners. This unexpected verdict raises questions about the future of Trump’s trade policies and what it means for affected countries.
Trump insists he will keep pushing tariffs using other legal avenues, but this ruling could mark a significant shift in his approach. For many nations and industries impacted by the tariffs, it might provide a much-needed break.
European leaders have responded cautiously. French President Emmanuel Macron expressed relief at the ruling, emphasizing the importance of checks and balances in democracy. He acknowledged that France would analyze the new global tariffs Trump has proposed, initially set at 10% but now raised to 15%.
German Chancellor Friedrich Merz also voiced hope that this ruling might ease trade restrictions for German exporters. He remarked that “tariffs harm everyone,” reflecting a shared concern among European leaders for fair trade practices.
The European Commission is in close contact with the US government to clarify the implications of the ruling. This decision has thrown the ratification process of the EU-US trade agreement, established last July, into uncertainty. EU officials had already paused that process due to Trump’s previous actions, like his threats over Greenland.
Bernd Lange, chairman of the European Parliament’s trade committee, mentioned on social media that the “era of unlimited, arbitrary tariffs” might be coming to a close. He called for careful evaluation of the ruling’s impacts.
The original EU-US trade pact aimed to eliminate tariffs on US industrial goods entering the EU while keeping EU goods at a fixed 15% rate. However, the Supreme Court ruling complicates everything, pushing the timeline for ratification into doubt.
According to Carsten Brzeski, an expert at ING Research, the new political landscape may encourage EU lawmakers to delay ratification even further. Yet, he noted that various tariff options remain available to the US, which will keep trade partners on alert.
In the UK, officials, who had initially partnered with the US on tariffs after Trump’s policies began, are also trying to navigate the implications of this Supreme Court decision. They aim to maintain their favorable trade status with the US.
German industry leaders have reacted positively but want clarity. The Federation of German Industries stated the ruling signals hope for a fair trading environment but emphasized that uncertainty still looms. Wolfgang Niedermark of the BDI called for quick discussions with the US to clarify the ruling’s effects on the trade deal.
While the Supreme Court ruling struck down many of Trump’s tariffs enacted under the International Emergency Economic Powers Act (IEEPA), some sector-specific tariffs based on national security remain intact. For instance, tariffs on steel and aluminum are still in place. Chinese goods are also still subjected to tariffs under Section 301 of the Trade Act of 1974.
Observers believe that Trump’s new 15% global tariffs could add to the existing pressure, particularly affecting European car manufacturers, who previously dealt with 15% tariffs on US exports. The uncertainty surrounding future tariff rates adds to the industry’s anxiety.
In the pharmaceutical sector, no tariffs have been implemented, but Trump has repeatedly warned of significant levies looming. If these tariffs do surface, they’ll fall under different legislation that allows for tariffs based on national security concerns.
Experts like Brzeski warn that while the Supreme Court ruling offers some hope, the existing framework for imposing tariffs could lead to targeted levies that are equally burdensome if not more so. Industries like pharmaceuticals, chemicals, and automotive components remain in jeopardy.
This shift in US trade policy underscores the complexities of international relations in a globalized economy. The next steps will be crucial for both the US and its trade partners as they navigate this uncertain landscape.
