Trump Tariffs Ruled Against: Power Diminished, Not Defeated

President Trump has implemented a temporary 15% global duty on imports into the U.S. following a Supreme Court ruling that limited his authority to impose sweeping country-based tariffs through the International Emergency Economic Powers Act (IEEPA).

Trump’s Temporary Tariff Fix

While the court’s ruling prevents Trump from utilizing IEEPA for broad tariff applications, it does not eliminate his other trade powers. The new 15% duty, enacted under Section 122 of the 1974 Trade Act, is set to expire in 150 days, after which Congressional approval would be required for continuation.

Securing Congressional support may be difficult, according to Heng Koon How, head of markets strategy at UOB. Some Republican lawmakers have expressed opposition to tariffs on allies like Canada, potentially hindering Trump’s ability to gain a majority in both houses.

This situation is expected to create volatility in the tariff landscape, impacting the U.S. economy and global trade. “For the next 150 days, there will be much more uncertainty as to how tariffs are stacked up, how they apply, if the existing trade deals still apply, etc.,” Heng told CNA’s Asia First programme.

Beyond Section 122, Trump retains the ability to utilize other legal avenues, including Section 301, which addresses unfair trade practices, and Section 232 of the Trade Expansion Act of 1962, which concerns national security. Section 232 is currently in effect for tariffs on steel, aluminum, lumber, and automobiles.

The Supreme Court’s decision has also raised questions about recently established trade deals. While Trump has indicated some agreements will remain, specific details are still unclear. Some trade partners are concerned they may face the 15% global rate in addition to previously negotiated rates.

“So, it’s a consideration for every country (if) they want to … on a diplomatic level disturb the status quo,” said Edmund Sim, a partner at Appleton Luff International Lawyers in Washington DC. He added that Trump could impose rates higher than 15% due to other sections of the law, making it difficult for countries, such as those at last week’s Board of Peace meeting, to revisit existing agreements with the U.S.