Supreme Court Declares Trump Tariffs Illegal Yet Trade Ambiguity Lingers
The US Supreme Court has delivered a landmark ruling declaring former President Donald Trump's aggressive tariff policies illegal, but this legal clarity has done little to dispel the pervasive uncertainty gripping global businesses and governments. In a decision that specifically targets the use of the International Emergency Economic Powers Act (IEEPA) for imposing tariffs during peacetime, the court has forced the White House to pivot toward potentially more cumbersome alternative measures to maintain its trade stance.
Business Leaders Voice Concerns Over Continued Ambiguity
William Bain, the head of trade policy at the British Chambers of Commerce, emphasized that while the ruling provides some clarity regarding presidential executive powers, it "does little to clear the murky waters for business." Bain pointed out that the court's decision applies exclusively to the IEEPA, leaving other legislative tools available to Trump untouched. "Different legislation has been employed for other US tariffs, such as those on steel and aluminium, and the president retains additional options to sustain his current regime," Bain noted, highlighting the potential for Trump to utilize the 1974 Trade Act to impose even higher tariffs than the existing 10% levies on the UK.
The ruling also fails to address critical questions about whether US importers will receive refunds for tariffs already paid or if foreign exporters might benefit from any rebates based on trading terms, adding another layer of complexity to an already volatile situation.
International Reactions and Warnings
European Commission spokesman Olof Gill stated, "We take note of the ruling by the US Supreme Court and are analysing it carefully. We remain in close contact with the US administration as we seek clarity on the steps they intend to take in response to this ruling." Gill underscored the importance of stability and predictability in transatlantic trade, advocating for continued efforts to reduce tariffs.
From Canada, the Chamber of Commerce warned against interpreting the court decision as a "reset of US trade policy." President Candace Laing cautioned, "Canada should prepare for new, blunter mechanisms to be used to reassert trade pressure, potentially with broader and more disruptive effects." Canadian Minister for International Trade Dominic LeBlanc echoed this sentiment, pledging ongoing collaboration with the US to foster growth and opportunities while acknowledging that businesses still require substantial support.
In Germany, the industry group BDI hailed the ruling as a "strong signal for the rules-based trading system," asserting that "the verdict is clear proof that the separation of powers in the USA remains robust."
Global Implications and Deal Repercussions
For India, the court's decision means that a significant portion of its exports to the US will no longer face tariffs, according to former trade official Ajay Srivastava. However, Srivastava warned in an analysis for the Global Trade Research Initiative that the ruling could render recent US trade deals with countries like the UK, Japan, the EU, Malaysia, Indonesia, Vietnam, and India "one-sided and useless," potentially prompting partner nations to abandon these agreements.
US Business Groups Celebrate but Urge Caution
American business organizations have welcomed the ruling, viewing it as an opportunity for the White House to adopt a more measured approach to trade policy. Learning Resources, the US company that initiated the lawsuit against the Trump administration, described the decision as "a powerful reaffirmation of the rule of law and constitutional separation of powers." The company affirmed, "This ruling affirms what several lower courts have already concluded: the tariffs imposed under the International Emergency Economic Powers Act are unlawful."
The US National Retail Federation highlighted that the ruling "provides much-needed certainty for US businesses and manufacturers, enabling global supply chains to operate without ambiguity." Meanwhile, the Business Roundtable, representing over 200 executives from America's largest corporations, urged the administration to "recalibrate its approach to tariffs, focusing on targeted actions to address specific unfair trade practices and national security concerns," according to CEO Joshua Bolten. Bolten further advocated for enhanced coordination between the United States and its allies to effectively tackle trade challenges from non-market economies, emphasizing that "a stable trading system with more focused tariffs would help unleash America's full economic potential."
