It’s refreshing to see the US Supreme Court regaining its backbone and standing up to Donald Trump’s wildest caprices. Friday’s 6-3 decision to cut tariffs on imports virtually everywhere based on the fallacious claim that they solve national emergencies — reassuring the world that the US system of government based on separation of powers, checks and balances and the rule of law has not completely collapsed.
But let’s hold the (imported) champagne. The Court’s ruling will not restore the United States to its former position as a reasonable, credible player in the global economy. The rule-based economic structure that underpinned the integration of the world economy in the decades following World War II continued to crumble. Trump is still intent on dismantling it. And he has the power to do so.
The court’s decision is good news, of course, as the International Emergency Economic Powers Act (IEEPA) implemented by Trump doesn’t actually give him the authority to raise tariffs. These are a type of taxation over which, under the Constitution, Congress has sole authority.
The ruling clearly indicated that the administration was led to “hollow out” American manufacturing to deal with tariffs and trade deficits justified by a “public health crisis” caused by illegal drugs from Canada, Mexico and China. But it suspends all other “national emergency” duties attributed to Trump, including the Brazilian government’s tussle with Elon Musk’s X and the jailing of former president Jair Bolsonaro for an attempted coup.
Swiss-based Global Trade Alert predicts the Supreme Court’s call will reduce the United States’ average, trade-weighted tariff from 15.3% to 8.3%, which will come as good news for harried American consumers as well as businesses that rely on imported components.
Barring any countervailing action by the White House, the average tariff on imports from China would drop from 36.8% to 21.2%, on a trade-weighted basis. It will decrease from 26.3% to 6.8% on Brazilian imports and from 14.9% to 9.9% on Japanese goods.
But before anyone calls this a victory, it should be noted that 8.3% is an unusually high tariff by recent historical standards. More importantly, the court has little to say about the corruption at the heart of Trump’s trade war: the absurd, bullshit arguments Trump deploys to justify aggression against the world.
The court said nothing about whether the president’s tariffs would be justified by how they would address the emergencies they cited. (The blanket “reciprocal tariffs” he imposed on “Liberation Day” last April failed to curb the trade deficit, which is projected to grow by 2% in 2025, fueled by a rise in imports to a record $4.33tn.)
The justices did not address whether the President could say anything he wanted to in order to justify government action, which might be misleading. Apparently, Bolsonaro’s arrest or the International Criminal Court’s trial of US and Israeli officials is a “national emergency,” he said. He cannot use that argument to tax.
The court’s decision, of course, increases economic uncertainty, as Trump’s deals with other countries are upended by the decision. He needs another source of income to fill the budget hole created by the earlier custom duties. Capital Economics estimates that levies collected so far under the now-invalid national emergency pretext amount to about $120bn, or half a per cent of gross domestic product.
As Justice Brett Kavanagh noted in his dissent, the Supreme Court did nothing to eliminate all other weapons available to Trump to continue his attack.
“We have very powerful alternatives,” a frustrated president said at a press conference after the decision was announced. “We’ll take more money.” He immediately announced a 10% blanket global tariff “in excess of our normal tariffs already imposed”, under Section 122 of the Trade Act of 1974, which allows for temporary tariffs to address “large and serious” balance-of-payments imbalances.
So here we go again, but there may be reason to be excited. Perhaps the court’s ruling will protect the international economy from Trump’s machinations. Section 122 requires congressional approval to extend the tariffs beyond 150 days and must not discriminate between countries – meaning Trump cannot adjust them under the guise of bilateral agreements.
Trump could invoke Section 301 of the 1974 trade law, which allows tariffs to retaliate against unfair trade practices, and which he deployed against China during his first term. He used a section of the Trade Expansion Act of 1962 to impose tariffs on steel, aluminum, lumber, semiconductors and autos on national security grounds. No. 232 can be implemented. But these also come with limitations.
Before retaliating under Section 301, for example, the US Trade Representative must conduct an investigation, consult with the country in question, and publish its proposed action and the factual findings on which it is based.
Who knows if world trade will get a real reprieve. It is certain that Trump will not take this defeat lightly. Many countries around the world must now negotiate some new trade agreements with the United States. It is unclear whether the Supreme Court’s decision will facilitate that process.
