Trump's new 15% tariff raises new legal and trade issues

Investing.com - Tariffs once again become the most talked-about topic in the market. After the Supreme Court rejected President Donald Trump’s emergency tariffs, he announced the implementation of a temporary 15% global tariff under the Trade Act of 1974.

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The White House official statement initially indicated that tariffs would be set at 10% starting Tuesday, but Trump later increased this figure over the weekend.

Importantly, Congress can extend the tariffs after the so-called Section 122 tariffs expire. Congress holds the constitutional trade authority, which is the core argument the Supreme Court used to dismiss Trump’s emergency tariffs.

However, as ING analysts pointed out, Trump could also do this. In theory, the president can let the additional tariffs expire, declare a new emergency, and then restart the 150-day period, effectively creating a “de facto permanent tariff tool,” they said.

Outside the United States, major trading partners are trying to understand what the Supreme Court’s ruling means for recent trade agreements reached with the Trump administration.

The European Commission, the EU’s executive body and chief negotiator for the 27 member states, has called for a “full clarification” from the U.S. on how tariffs will change following the ruling. Additionally, China, after engaging in a tit-for-tat tariff war with the U.S. last year, has also held intense negotiations with the U.S., stating it is conducting a “comprehensive assessment” of the Supreme Court’s decision and urging the U.S. to abandon “unilateral tariff measures” against trading partners.

Potential refund impacts

While the Supreme Court ruled that Trump’s use of the Emergency Power Act of 1977 to impose comprehensive tariffs on multiple countries was illegal, many issues remain regarding the impact of the ruling, especially the fate of refunds for companies affected by the tariffs.

U.S. Customs and Border Protection stated it would cease collecting the tariffs rejected by the Supreme Court starting at 12:01 a.m. Eastern Time on Tuesday (05:01 GMT)—but did not explain why tariffs are still being collected at border crossings days after the ruling, nor whether importers will receive potential refunds.

In a message to freight carriers, Customs and Border Protection said that the cessation of collection does not apply to any other tariffs set by Trump, such as those imposed under laws related to national security and unfair trade practices.

However, for investors, RBC Capital Markets analysts noted in a report that the latest trade developments are unlikely to have a substantial impact on the long-term outlook of the U.S. stock market, despite the overall tariff levels having decreased.

Including strategist Lori Calvasina, they wrote: “The Supreme Court’s ruling and the idea that the White House will implement tariffs through other mechanisms have been widely anticipated by U.S. equity investors.”

“Furthermore, U.S.-listed companies have consistently emphasized and highlighted their ability to respond to the changing tariff environment through supply chain adjustments, pricing, and other mitigation strategies during multiple earnings seasons, including the current quarter.”

They added that any comments from companies regarding the potential short-term earnings impact of the Supreme Court’s ruling will now become a focus of attention.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.