Supreme Court Stops Trump Tariffs, Affecting Half of Revenue

The Supreme Court has stopped some Trump tariffs. This decision affects about half of all money the US gets from tariffs. This is a big change for trade rules.
By Newsroom | Law, Business |

The U.S. Supreme Court has struck down key tariffs imposed by former President Donald Trump, signaling a significant shift in his economic policies. This decision impacts a substantial portion of the total tariff revenue collected, raising questions about the future of such trade measures. While some tariffs have been removed, others, enacted under different legal frameworks, remain in place, creating a complex and evolving trade landscape. The former president's stance suggests a continued commitment to using tariffs as a tool, despite this judicial setback.

Trump’s Tariffs Aren’t As Dead As You Think They Are - 1

Background of the Tariffs

The tariffs in question were largely implemented using a 1970s emergency statute. This legal basis was used by the Trump administration to impose tariffs on goods from numerous countries. The court found that President Trump overstepped his authority by using this emergency statute to enact these widespread tariffs.

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Trump’s Tariffs Aren’t As Dead As You Think They Are - 2

  • Timeline of Tariffs: The former president first used this law to declare a national emergency related to fentanyl trafficking and subsequently imposed economy-wide tariffs on Canada, Mexico, and China.

  • Legal Challenge: The Supreme Court's decision sided with lower courts that found the former president improperly used tariffs in response to declared national emergencies, specifically concerning fentanyl trafficking and international trade deficits.

  • Scope of Impact: The tariffs at the center of this Supreme Court case represented approximately half of the total tariff revenue collected.

Supreme Court Ruling and Immediate Reactions

The Supreme Court's ruling was a clear rebuke of the former president's economic agenda, impacting a central plank of his policy.

Trump’s Tariffs Aren’t As Dead As You Think They Are - 3

"A majority of the justices sided with lower courts that had found Trump improperly used tariffs to respond to national emergencies he declared over fentanyl trafficking in North America and international trade deficits…"

The decision has led to immediate reactions, with the former president reportedly expressing strong disapproval. The stock market, however, appeared to react positively to the news, with major U.S. stock indexes erasing early losses.

Trump’s Tariffs Aren’t As Dead As You Think They Are - 4

The Former President's Continued Stance on Tariffs

Despite the Supreme Court's decision, there are indications that the former president remains committed to using tariffs as a policy tool.

  • Future Investigations: The former president has stated his intention to launch additional investigations into foreign imports under different legal provisions, such as Section 301 of the U.S. Trade Act.

  • "True Believer" in Tariffs: Reports suggest the former president is a firm proponent of using tariffs as a negotiating tactic.

  • New Tariff Threats: Following the ruling, there were reports of threats to impose new 10% tariffs, potentially under temporary measures lasting up to 150 days unless extended by Congress. These would apply to countries with which the U.S. has a trade deficit.

The Remaining Tariffs and Economic Landscape

While the Supreme Court struck down specific tariffs, other trade measures remain in place.

  • Different Statutes: Other tariffs were issued under different statutes that were not part of the legal challenge and thus are not affected by this ruling.

  • Sector-Specific Tariffs: The former president has used laws like Section 232 of the U.S. Trade Expansion Act to impose sector-specific tariffs, which are distinct from the tariffs addressed in the Supreme Court case.

  • Economic Impact: While there were initial fears about the economic consequences of tariffs, the economy has not shown signs of a significant downturn directly attributable to these measures. Some economists suggest that companies absorb some of the tariff costs to maintain profit margins, and major tariff exceptions were made for certain countries. The promise of a revival in domestic manufacturing due to these tariffs has not yet materialized according to some analyses.

Expert Analysis

"Trump often exploited IEEPA [International Emergency Economic Powers Act] as his basis for new tariffs, so SCOTUS’ decision strikes directly at his economic agenda, even beyond the mere numbers."

This quote highlights the direct impact of the Supreme Court's decision on the legal foundation used for many of the former president's trade policies. The ruling suggests a potential re-evaluation of how such economic powers can be wielded in the future.

Read More: US Supreme Court Strikes Down Some Trump Tariffs, Causing Trade Worry for Canadian Businesses

Conclusion and Implications

The Supreme Court's decision represents a significant legal and political development concerning trade policy. While a specific set of tariffs has been invalidated, the former president's continued advocacy for their use suggests that trade disputes and the imposition of tariffs will likely remain a prominent feature of the economic landscape. The legal challenges and the administration's arguments highlight the tension between executive authority and the established legal framework for imposing trade restrictions. The possibility of new tariffs being introduced under different legal authorities means that businesses and international trading partners will continue to monitor developments closely.

Sources

Frequently Asked Questions

Q: Why did the Supreme Court stop some of Donald Trump's tariffs?
The Supreme Court decided that former President Trump used a 1970s law incorrectly to put tariffs on goods from other countries. The court said he went beyond his power.
Q: How much money is affected by this Supreme Court decision?
The tariffs that were stopped by the court made up about half of all the money the U.S. government collected from tariffs. This is a large amount of money.
Q: What happens next with tariffs after this ruling?
Even though some tariffs were stopped, others put in place using different laws are still active. The former president also said he might put new tariffs in place using other rules.
Q: How did the stock market react to the Supreme Court's decision?
The U.S. stock market seemed to react well to the news. Major stock indexes that were down earlier in the day became better after the ruling was announced.
Q: Will Donald Trump try to put tariffs back in place?
Yes, reports say he still believes in using tariffs as a tool. He has talked about starting new investigations and possibly putting new, smaller tariffs on goods from countries where the U.S. buys more than it sells.