Trade War Chaos 💥: Trump's Tariff Storm! 🌊
World
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Following his inauguration in January 2025, Donald Trump initiated a series of tariff actions, utilizing the International Emergency Economic Powers Act. He imposed a 15 percent tariff on trade, subsequently raising it to 10 percent across all trading nations, beginning February 24. These actions mirrored earlier tariffs on steel, aluminum, lumber, and automobiles, established under Section 232 of the Trade Expansion Act of 1962. Simultaneously, agreements were reached with countries like India and the European Union, initially establishing tariffs of 18 percent and 15 percent respectively, with the European Parliament’s trade committee scheduled to vote on the EU’s trade deal with the US on February 24. These developments introduced considerable uncertainty into global trade patterns, reflecting a significant shift in US trade policy.
SUPREME COURT RULING UNCERTAINTY SHROUDS GLOBAL TRADE
The United States Supreme Court’s ruling, which declared Donald Trump’s sweeping tariffs unlawful, has injected uncertainty into global trade yet again, as the US president imposed a new 15 percent tariff on Saturday. Weeks after his inauguration in January 2025, Trump imposed tariffs against foes and allies using the International Emergency Economic Powers Act (IEEPA), unleashing a trade war that rattled global trade. The court’s ruling, however, does not apply to Trump’s tariffs on steel, aluminium, lumber and automotives since these were imposed under a different law – Section 232 of the Trade Expansion Act of 1962. Following the verdict, a furious Trump called the Supreme Court judges “fools and lapdogs” who are “very unpatriotic and disloyal to our Constitution”. He immediately signed an executive order under Section 122 of the US Trade Act of 1974 to impose a blanket 10 percent tariff on all countries the US trades with, starting on February 24. On Saturday, he raised the tariff to 15 percent, the highest rate allowed under this trade law, to address “large and serious balance-of-payments deficits”. Tariffs can be imposed under this law only for 150 days unless the US Congress agrees to extend it. Trump is the first president to use this law to impose tariffs. In a statement on Friday, the White House said some goods, such as certain agricultural products like beef, tomatoes, natural resources and fertilisers that cannot be grown or produced in the US, aerospace products, among others, will not be subject to the temporary levy. Shantanu Singh, an international trade lawyer, noted that since this is the first time this legal authority has been used by any US president, it could likely be litigated. “But the government has considerable leeway to determine this as trade deficits can form part of balance-of-payments deficits,” he told Al Jazeera. Trump has justified the tariffs as a way to balance the US’s trade deficits of more than $900bn. What happens to the trade deals? Several countries had signed trade deals to cushion themselves from Trump’s punishing tariffs last year. The United Kingdom, India and the European Union, among others, had entered into deals to lower tariffs on their exports to the US. But the ongoing tariff spectacle has thrown the future of those trade deals into doubt. Will they be charged the new 15 percent tariff or the agreed rate signed in the trade deals? Will India be tariffed at 18 percent, as per the trade deal, or 15 percent as announced by Trump on Saturday? Speaking to reporters on Friday, Trump said some of these trade agreements will stand. “The trade deals, because they are international, will likely remain in place,” Singh, the international trade lawyer, said. “being,” he said.
THE IMMEDIATE RESPONSE: TARRIF IMPLEMENTATION AND LEGAL CHALLENGES
Following the Supreme Court ruling, a furious Trump called the Supreme Court judges “fools and lapdogs” who are “very unpatriotic and disloyal to our Constitution”. He immediately signed an executive order under Section 122 of the US Trade Act of 1974 to impose a blanket 10 percent tariff on all countries the US trades with, starting on February 24. On Saturday, he raised the tariff to 15 percent, the highest rate allowed under this trade law, to address “large and serious balance-of-payments deficits”. Tariffs can be imposed under this law only for 150 days unless the US Congress agrees to extend it. Trump is the first president to use this law to impose tariffs. In a statement on Friday, the White House said some goods, such as certain agricultural products like beef, tomatoes, natural resources and fertilisers that cannot be grown or produced in the US, aerospace products, among others, will not be subject to the temporary levy. Shantanu Singh, an international trade lawyer, noted that since this is the first time this legal authority has been used by any US president, it could likely be litigated. “But the government has considerable leeway to determine this as trade deficits can form part of balance-of-payments deficits,” he told Al Jazeera. Trump has justified the tariffs as a way to balance the US’s trade deficits of more than $900bn. What happens to the trade deals? Several countries had signed trade deals to cushion themselves from Trump’s punishing tariffs last year. The United Kingdom, India and the European Union, among others, had entered into deals to lower tariffs on their exports to the US. But the ongoing tariff spectacle has thrown the future of those trade deals into doubt. Will they be charged the new 15 percent tariff or the agreed rate signed in the trade deals? Will India be tariffed at 18 percent, as per the trade deal, or 15 percent as announced by Trump on Saturday? Speaking to reporters on Friday, Trump said some of these trade agreements will stand. “The trade deals, because they are international, will likely remain in place,” Singh, the international trade lawyer, said. “being,” he said.
TRADE DEAL IMPACTS: A COUNTRY-BY-COUNTRY ANALYSIS
The United Kingdom was one of the first to sign atrade dealwith the US last May after being hit by 5 percent tariffs on steel and aluminium exports, as well as a 25 percent tariff on cars and auto parts. Under their agreement, the US agreed that there would be zero tariffs on steel and aluminium imports from the UK, and for other goods, it was set at 10 percent. Last December, the two nations also agreed to zero tariffs on pharmaceuticals and medical products. After Friday’s Supreme Court ruling, William Bain, head of trade policy at the British Chamber of Commerce, said in a statement that the ruling does “little to clear the murky waters for business”. On Friday, a spokesperson told the media that the British government was “working with the US” to understand more about how the court’s ruling will affect the UK. The court ruling will not impact the UK’s deal on steel, aluminium and pharmaceutical exports. But Bain said the new 15 percent global tariff rate, which has been imposed under Section 122 of the Trade Act 1974, “will be bad for trade, bad for US consumers and businesses and weaken global economic growth”. China Trump had imposed one of the highest tariffs on China, and the world’s two largest economies were engaged in a trade war. At one point, they had slapped reciprocal tariffs exceeding 100 percent on some goods. The two countries have yet to sign a trade deal, but they agreed to lower the tariffs as part of a trade truce. After several rounds of trade talks and a summit between Trump and Chinese President Xi Jinping in South Korea in October, the two countries agreed to a one-year truce with a 10 percent baseline tariff. Trump also slashed the so-called fentanyl tariff to 10 percent. The Supreme Court ruling will lift tariffs imposed on chemicals used in fentanyl. However, tariffs on other Chinese exports, such as electric vehicles, aluminium and steel, Following the court’s ruling, Chinese Embassy spokesperson in the US, Liu Pengyu, told journalists that tariffs and trade wars serve neither the US nor China’s interests. He called on Beijing and Washington to work together to “provide greater certainty and stability for China-US economic and trade cooperation and the global economy”. Trump is scheduled to travel to China from March 31 to April 2 to meet Xi and discuss trade. But Singh, the trade lawyer, said countries like China that did not negotiate deals with the US are quite well placed because, as a result of the court’s ruling and repeal of the reciprocal tariffs, they have achieved a lower rate of tariff without having to make concessions. “China will definitely feel it has the upper hand going into negotiations with the US,” he said. Malaysia reduced its tariff from 25 percent to 19 percent, while Cambodia’s tariff dropped from 49 percent to 19 percent after their respective trade agreements with the US last year.
SECTION 122 TARRIF REVERSAL: A SHIFTING LANDSCAPE
The Supreme Court’s recent decision has injected significant uncertainty into the global trade environment, primarily impacting the implementation of the 15% Section 122 global tariffs initially imposed by the Trump administration. This ruling effectively voids the existing tariffs on a wide range of imports from numerous countries, including Vietnam, Indonesia, India, and the European Union. The immediate consequence is a complex legal battleground as the US Trade Representative (USTR) will now leverage Section 301 investigations to re-evaluate trade practices and potentially reinstate reciprocal tariffs. This process, coupled with the 150-day window granted by the court, represents a critical juncture, demanding immediate action from both the US and its trading partners.
THE IMPACT ON KEY TRADE PARTNERS
Several nations have already reacted to the Supreme Court’s ruling, demonstrating a strategic recalibration of their trade policies. Indonesia, having previously agreed to a 19% tariff rate, confirmed the continued application of this rate following the court decision. Similarly, Vietnam maintained its 20% tariff. More significantly, the US and India reached a framework trade deal, with India committing to reduce tariffs on US exports, including clothing, pharmaceuticals, precious stones, and textiles, down to 18%. This demonstrates a proactive response to the shifting legal landscape, aiming to secure continued access to the US market. India’s decision to eliminate or reduce tariffs on a broader range of industrial goods and agricultural products further underscores the strategic importance of maintaining trade relations with the world’s largest economy.
A MULTI-FRONT LEGAL STRUGGLE
The Supreme Court’s decision has triggered a complex legal battle involving multiple parties and legal authorities. The USTR will utilize Section 301 investigations to assess trade practices of countries like Vietnam, Indonesia, and India, aiming to reinstate reciprocal tariffs. This process, coupled with the 150-day window, is crucial. Legal expert, Singh, highlighted that the USTR will likely conduct swift investigations, and the court’s decision creates a strategic window for the US to challenge trade practices and potentially re-establish reciprocal tariffs. The legal landscape is dynamic, demanding careful monitoring and strategic responses from all involved parties.
This article is AI-synthesized from public sources and may not reflect original reporting.