Trump's Trade Policies Face Setbacks Amid Supreme Court Ruling
Impact of Trump's Trade Decisions
New Delhi, Feb 24: Since assuming the role of the 47th President of the United States on January 20 last year, Donald Trump has made significant waves in global trade dynamics, often emphasizing his preferred terms: trade and tariffs.
Initially, he implemented a series of "reciprocal tariffs" that compelled numerous nations to either negotiate trade agreements with the U.S. or face unfavorable conditions.
According to a report from a UK publication, after Trump disrupted the global economic framework in 2025, Japan was among the nations rushing to finalize a trade agreement, committing to substantially boost investments in the U.S. in return for reduced tariffs on Japanese goods.
However, just two days post-Trump's victory announcement, his efforts to alter international trade faced a significant setback when the U.S. Supreme Court ruled against him.
On February 20, the Supreme Court delivered a 6–3 verdict stating that Trump exceeded his authority by imposing global tariffs under the International Emergency Economic Powers Act (IEEPA), which is intended for national security crises rather than broad trade actions. This ruling effectively nullified many of Trump's previous tariffs.
In characteristic fashion, Trump responded to the ruling with disdain, quickly announcing a 10 percent global tariff, which he later escalated to 15 percent by invoking Section 122 of the Trade Act of 1974.
This section permits the President to impose temporary import duties for a maximum of 150 days, aimed at addressing balance-of-payments deficits, but requires Congressional approval for extension.
With mid-term elections approaching, the House may be reluctant to expedite any voting on this matter.
Currently, businesses and trading partners are left in a state of uncertainty regarding applicable tariffs, complicating long-term strategic planning. Nevertheless, the situation has evolved, with allies feeling empowered to renegotiate certain terms.
Countries like India, Brazil, and China have reportedly received significant tariff reductions without making any concessions, while the UK may face increased tariffs despite its compromises.
In India, negotiations for a trade deal have been temporarily halted, causing concern among exporters in sectors such as textiles, chemicals, and auto parts.
The European Union is also seeking clarity following an initial trade agreement with the U.S., with the European Commission indicating a desire to consult the WTO and warning of potential counteractions.
Brazilian agricultural exporters are anxious about rising costs, with President Luiz Inacio Lula da Silva advocating for collective negotiating efforts among countries during his visit to Delhi.
Meanwhile, Chinese President Xi Jinping is expected to have increased leverage in upcoming negotiations with Trump during the latter's visit to Beijing from March 31 to April 2. China's Ministry of Commerce has acknowledged the Supreme Court's ruling and is evaluating its implications.
They noted that unilateral actions, such as reciprocal tariffs and fentanyl tariffs, not only breach international trade regulations but also conflict with U.S. domestic laws, ultimately serving no party's interests.
Trump may find it challenging to persuade Xi to increase purchases of American soybeans, Boeing aircraft, and energy resources.
China might also slow down the export of rare earth minerals, essential for American high-tech and AI manufacturing. Some reports suggest that Beijing could consider retaliatory measures, although these may be postponed until the Xi-Trump summit in Beijing.