After the Supreme Court struck down the tariffs imposed under the International Emergency Economic Powers Act, the Trump administration has responded by unilaterally imposing 15% tariffs for the next 150 days via Executive order under Section 122 of the Trade Act of 1974.
He initially had the figure at 10%, but added 5% more after sleeping on the ruling! He has also signaled his administration will make it very hard for companies to get refunds on tariff’s already paid.
Putting aside President Trump’s usual demeaning, petulant and salty approach to the decision and the individual Republican supreme court justices, the main challenge will be that countries and companies will now consider his Tariff policy toothless and potentially avoid complying with them knowing that the 15% tariffs are only temporary and a legal case could go well beyond Trump’s presidency.
Basically, company lawyers will argue that non-compliance carries little long-term risk and the latest ruling will do to restore confidence in the policy’s durability. The stock markets seem to agree with little reaction to the ruling, suggesting the impact of the Tariff’s has already been discounted.
Overall consumers will likely benefit from this ruling as tariffs mainly function as a tax borne primarily by American consumers, with estimates ranging from 90–100% of the costs being passed down. However the temporary nature of Section 122 tariffs (limited to 150 days) will create some short term uncertainty for both domestic companies and foreign trading partners.
With the Supreme Court having fulfilled its constitutional role, the spotlight now falls on Congress to act. However, given the razor-thin majorities and deep dysfunction that have come to define Capitol Hill, meaningful legislative intervention remains unlikely in the near term.
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Hmmm…if the Dow goes up he will pretend the Supreme court decision was his doing