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The U.S. Supreme Court’s ruling on import duties has sparked renewed debate on the issue. Almost immediately after the court invalidated the legal basis for the previous tariffs, President Trump turned to a new tool: tariffs based on different legislation. This action is exacerbating economic uncertainty.
Companies heavily involved in trade with the U.S. Welcomed the Supreme Court’s decision. “This is fantastic for us,” said Harm-Jan van Dijk of Fishtales, a company that sells sustainably preserved fish, much of which is exported to America. The ruling offered a brief respite for businesses navigating complex international trade dynamics.
FineField, an agricultural machinery seller, was also “generally positive” about the news, according to director Marcel Beelen. “Every tariff reduction is a benefit.”
Though, Trump quickly ended that relief. “Foreign countries that have been ripping us off for years are thrilled. They are so happy. They are dancing in the streets, but that won’t last long, I can tell you that,” he stated.
During a press conference, he announced he would now invoke another law, imposing a 10 percent tariff on all countries. The measure is valid for a maximum of 150 days and can be extended with Congressional approval.
Deal on Autos in Jeopardy?
The proposed 10 percent tariff is significantly lower than previous levels. On April 2 of last year, it was dubbed “Liberation Day” by the President, as he announced a series of import tariffs in the White House garden, including a potential 20 percent tariff on the European Union.
In July, the U.S. And the EU reached a trade agreement, reducing the tariff to 15 percent. The EU did not impose additional retaliatory tariffs. The deal also reduced sector-specific tariffs, which remain in effect despite the Supreme Court ruling.
Trump has, for example, imposed additional tariffs on aluminum, steel and automobiles. A 25 percent tariff was in place on cars, including those from the EU. After the deal was finalized, the tariff for Europe was reduced to 15 percent.
This development makes the EU’s response to the ruling particularly noteworthy, according to Rabobank economist Maartje Wijffelaars. The trade deal between the EU and the U.S. Has not yet been finalized, as it still requires approval from the European Parliament. “Europe could say: we are stopping the deal. That is possible, but what happens then with those auto tariffs? If Europe doesn’t keep to the agreement, what will the U.S. Do?”
150 Days of Certainty
For the next 150 days, Trump has found a solution using another law, the Trade Act of 1974, Section 122. This law, which has never been used before, allows him to impose a tariff of up to 15 percent, but Trump has chosen to implement a 10 percent tariff.
the U.S. President is invoking two other laws. With Article 301 from the same trade act, he can impose tariffs due to unfair trade practices, but these can only be implemented after an investigation into those practices.
“There are already various investigations underway, for example, into chips and pharmaceutical products,” Wijffelaars explained. Before there is certainty whether Trump will impose tariffs on these, the investigations must be completed by a government agency, which could take months.
For the next 150 days, businesses have certainty, as a 10 percent tariff will apply. Beyond that period, the situation remains highly uncertain. “There are still many uncertainties. The chance that they will disappear completely and nothing will take their place is small,” Wijffelaars believes.
