The U.S. plans to impose a new round of tariffs on approximately six industries citing "national security" reasons.

Local time on the 23rd, U.S. media reported that the U.S. government is considering imposing a new round of tariffs on approximately six industries under the guise of “national security.” Sources say the proposed tariffs could cover industries such as large batteries, cast iron and iron fittings, plastic pipes, industrial chemicals, as well as power grid and telecommunications equipment. These new tariffs will be implemented separately from the recent global 15% tariff measures.

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Trump Faces Supreme Court in “Tariff Cloud”: What Does It Mean for Global Trade and the U.S. Economy?

Last Friday, the U.S. Supreme Court rejected President Trump’s tariff policies, but the controversy is far from over, as a new, more tense round of trade tensions has emerged. Economists generally believe that the ruling’s subsequent effects could threaten global trade relations and potentially harm the U.S. economy.

On February 20th, local time, the Supreme Court ruled 6-3 that President Trump lacked the legal authority to implement the comprehensive tariffs enacted last April under the International Emergency Economic Powers Act (IEEPA).

However, Trump did not accept this ruling and subsequently imposed new tariffs of up to 15% on a series of U.S. trading partners, further escalating global trade tensions. EU leaders expressed disappointment over the new tariffs, believing that U.S. policy shifts would overturn trade agreements reached last year with the EU and the UK.

Economists see resistance to the latest U.S. tariff threats as highlighting deep dissatisfaction with the president’s unpredictable trade policies, which may lead foreign governments to reduce trade with the U.S., causing companies to cut back on expansion, investment, and hiring.

This could even weaken the U.S. economy.

Mike Reid, Chief U.S. Economist at Royal Bank of Canada, said in a recent interview, “This will change the way we trade with the world’s largest economy and will have economic consequences.” He was referring to the Supreme Court’s ruling and the new tariff measures.

Moody’s Analytics Chief Economist Mark Zandi stated that the turbulence of the trade war could cause both businesses and foreign governments to adopt a cautious stance, resulting in only negative impacts on the U.S. economy.

In an interview, he said, “Businesses don’t know what’s coming next. They will reduce investments, cut back on hiring, and slow down expansion. This will limit U.S. economic growth.”

The economist further noted that, with increased uncertainty, foreign governments might react similarly, continuing to distance themselves from the U.S.

“They are definitely overwhelmed by this,” Zandi said. “People are increasingly thinking that U.S. economic management is poor, and objectively, they are right. The situation is a bit bad and seems to be getting worse.”

Economists add that this outlook could lead some countries to shift trade away from the U.S. toward other partners, including China. Chinese customs data show that in December last year, China’s exports increased by 6.6% year-on-year in USD terms, surpassing analyst expectations and pushing China’s annual trade surplus to a record high.

“Misty” Uncertainty Remains

It’s clear that Trump does not seem defeated by the Supreme Court’s ruling—in fact, he appears to have become more aggressive. He previously announced that, under Section 122 of the Trade Act of 1974, he would impose a “global import tariff” at a rate of 10% for 150 days to replace the tariffs deemed illegal by the court. This provision had never been used before. Soon after, he announced raising this import tariff rate to 15%.

Trump also stated that all tariffs imposed on grounds of “national security” and those under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 would remain in effect.

However, it’s worth noting that both the Trade Act of 1974 and the Trade Expansion Act of 1962 have their shortcomings, and are less direct than the IEEPA.

Section 301 of the Trade Act of 1974 authorizes the USTR (United States Trade Representative), under presidential instructions, to impose tariffs on trade measures by other countries that discriminate against U.S. companies or violate international trade agreements, with no upper limit on rates. Its drawback is procedural complexity: the USTR must conduct investigations, often consult with foreign governments, and seek public comments.

The advantage of Section 232 of the Trade Expansion Act of 1962 is that the scope of tariffs is not limited by law, and investigations are led by the U.S. Department of Commerce, giving the government high control over the process. Its disadvantage is that it cannot be implemented immediately; the Department of Commerce must complete investigations and submit a report to the president within 270 days. Also, it targets specific industries rather than the entire country, making it less comprehensive than the IEEPA.

In any case, this means that the U.S. may continue to impose tariffs on its foreign trade partners for at least the next few years.

Some optimists believe that investors and economists should not be overly worried about the current situation.

Citi Group economist Veronica Clark told clients that the implementation of new trade tariffs “means that, in the short term, actual tariff rates or our inflation forecasts are unlikely to change significantly.”

Clark pointed out, “The final Section 301/232 tariffs may impact the prices of certain goods in the future, but there is still a lot of uncertainty. The 10% tariff under Section 122 could reduce the effective tariff rate by 3-4 percentage points, while the 15% tariff should keep the effective rate roughly unchanged (possibly decreasing by about 1 percentage point).”

Zandi remains cautious, warning that while the overall impact of the new tariffs is still uncertain, a few things are clear.

“America is disengaging from the world, and other countries are now disengaging from America. De-globalization is a heavy burden on the economy and will ultimately lead to economic weakness,” he added.