Trump Imposes New 10% Tariff Following Supreme Court’s Rejection of Global Import Taxes
US President Donald Trump has enacted a new 10% global tariff to replace the import taxes invalidated by the Supreme Court. He described the court’s ruling as terrible and criticized the justices who rejected his trade policy, labeling them as fools.
Background on the Tariff Controversy
– The Supreme Court delivered its decision with a 6-3 vote, asserting that Trump had exceeded his authority in imposing the tariffs.
– This ruling marked a significant victory for businesses and US states that contested the tariffs, potentially paving the way for billions in refunds while creating uncertainty in the global trade landscape.
During a White House briefing, Trump indicated that receiving refunds would likely involve a lengthy legal struggle, stating he anticipated the issue would be tied up in courts for years. He asserted that he would leverage other laws to maintain his trade strategy, aiming to bolster investment and manufacturing in the US. We have alternatives – great alternatives, and we’ll be a lot stronger for it, he declared.
Legal Basis for the Tariffs
The court’s ruling focused on the import taxes that Trump initially proposed last year, targeting nearly every country. Initially aimed at Mexico, Canada, and China, the tariffs expanded significantly, leading to what Trump referred to as Liberation Day last April.
– The White House had relied on the 1977 International Emergency Economic Powers Act (IEEPA), which grants the President the authority to regulate trade during an emergency.
– Opponents, including businesses and several states, contended that the IEEPA did not explicitly authorize tariffs, arguing that Congress had not delegated such powers.
In his opinion, Chief Justice John Roberts emphasized that when Congress has delegated tariff authority in the past, it has done so explicitly: Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly.
Implications for Businesses
Trump’s response to the ruling was harsh; he expressed ashamed sentiments toward the Republican justices who sided against him, dubbing them fools and lap dogs and accusing them of being unpatriotic.
Despite his grievances, the stock market reacted positively to the ruling, with the S&P 500 rising approximately 0.7%. Business owners expressed cautious optimism:
– Beth Benike, owner of Busy Baby products in Minnesota, felt as if a thousand-pound weight has been lifted off my chest.
– Nik Holm, CEO of Terry Precision Cycling, referred to the ruling as a relief, though acknowledging that restoring their supply chain would take time.
Trump’s New 10% Tariff: Details and Exemptions
On Friday, Trump signed a proclamation imposing a new 10% tariff under the seldom-used Section 122 of the law, which allows such tariffs for 150 days, after which Congress must intervene. This order will take effect on February 24.
The announcement includes various exemptions for:
– Certain minerals and natural resources
– Fertilizers
– Selected agricultural products like oranges and beef
– Pharmaceuticals and specific electronics
– Certain vehicles
Notably, Canada and Mexico will continue to be exempt under the United States-Mexico-Canada Agreement (USMCA), covering most goods. A White House official noted that countries with existing trade agreements, including the UK, India, and the EU, will now be subjected to this global 10% tariff under Section 122 instead of their previously negotiated rates.
Analysts believe the Trump administration may also explore additional options under Sections 232 and 301, which are designed to address national security issues and unfair trade practices.
Conclusion: The Future of Tariffs
The recent developments in Trump’s tariff strategy have further complicated an already tense trade environment. While opponents and businesses alike are preparing for potential refunds from the previously collected tariffs, the lack of a clear process raises significant challenges.
As tariffs have already garnered at least $130 billion through the IEEPA, many businesses, including major retailers like Costco and food importers such as Bumble Bee Tuna, have filed lawsuits for refunds. The ruling did not directly guarantee refunds, leaving uncertainty regarding the legal processes ahead.
Diane Swonk, chief economist at KPMG US, cautioned that litigation costs could hinder smaller firms’ ability to reclaim funds, advising businesses to temper their enthusiasm for relief. How long it will take really is up to the government, noted Steve Becker, a legal expert.
In essence, while Trump’s 10% tariff may introduce fresh avenues for trade policy, the fallout of the Supreme Court’s ruling remains to be fully realized in the months ahead.