Thu, 29 May 2025

Thu, 29 May 2025 Faisal Islam: Tariff ruling completely changes the global trade war

The court ruling raises the real question about whether the wider so-called reciprocal tariffs due in July will ever come in to effect.
A US court has dealt a significant blow to President Donald Trump's trade policies, ruling that his use of national emergencies to impose tariffs on various countries is unconstitutional. The case was brought by 12 states and small businesses, who argued that Trump's actions bypassed Congress' authority over trade policy. The court agreed, stating that the president's powers to "regulate importation" are limited in scope and do not allow for the imposition of unlimited tariffs. This ruling raises questions about whether the US can impose reciprocal tariffs on other countries as planned, and whether nations will bother to negotiate with the US. It also casts doubt on whether Congress will approve the tariffs, which could be a key factor in determining their fate. The court's decision is based on the separation of powers in the US Constitution, which gives Congress control over trade policy. Trump had used national emergencies to impose tariffs on various countries, including Mexico, Canada, and China, but the court ruled that this was an unconstitutional abuse of power. The ruling also undermines the Trump administration's argument that tariffs can be used as a tool for negotiating trade deals. Instead, it suggests that the president's claims that tariffs "create leverage" to extract trade advantages are not a permissible rationale for using emergency powers. The impact on UK-US trade is likely to be minimal, but the decision could have significant implications for global trade relations. Other countries may now return to traditional tactics of pressuring key senators and congressmen to influence their decisions on trade policy. The White House has announced plans to appeal the ruling, but the court's decision has already emboldened other cases challenging Trump's trade policies, including one brought by California Governor Gavin Newsom.
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