Former President Donald Trump has significantly altered U.S. trade policy by implementing a series of tariffs on key trading partners, with potential implications hinging on an upcoming Supreme Court case. The legal challenge jeopardizes to over turn several of the administration’s most ambitious tariffs. These new tariffs have raised taxes on our adversaries like China, India, and Brazil. As of this writing, late September 2023, these tariffs have resulted in almost $90 billion in payments collected from American importers.
With Trump’s tariffs on the same imports from China have today soared to 145%! They’ve recently increased to 50% on all products imported from countries such as India and Brazil. An ongoing Supreme Court case challenges the legality of these tariffs. It undermines their future due to the fact that they were created under multiple legislative authorizing environments, including Section 301 investigations and the International Emergency Economic Powers Act.
The Legal Framework Behind Tariffs
The legal foundation for Trump’s tariffs is built on three main statutes. These tariffs are up to 15% and for 150 days to address acute balance-of-payments crises. If the Supreme Court finds against him, he already has the means to impose new tariffs at once under this section. Tariffs resulting from Section 301 investigations are unlimited in the amount they can be raised and how long they last.
Goldman Sachs economists suggest that even if the Supreme Court invalidates some tariffs, “we would expect the administration to use other authorities to impose substantially similar tariffs.” They noted that “large trading partners would likely see little change,” indicating that the impact of any ruling may be mitigated by alternative measures.
Investigations and Future Tariff Plans
Most recently, he’s launched Section 232 investigations into key imports in semiconductor, medical supply and robotics industries, adding a further layer of complexity to the tariff battleground. These investigations are the opening shots in his much larger plan to address trade imbalances and protect American industries. Section 301 investigations often take many weeks, if not months, to conclude. This delay adds a significant layer of uncertainty to U.S. trade policy even before any tariff would go into effect.
Considering the impending Supreme Court decision, Trump himself has recognized the necessity for backup plans. He added, “We’re going to have to come up with a game two plan.” This demonstrates that he plans to go further and change his approach in light of the court’s ruling.
Implications for Congress and Future Trade Relations
We would be wise to keep the limits of Trump’s tariffs in mind. They are only allowed to go beyond the first 150-day period if Congress approves their request. This increases the stakes and complicates the future of these tariffs. Lawmakers need to balance the economic impacts here and be attuned to public anger over U.S. trade practices with foreign countries.
That’s what the Supreme Court is now considering. Their ruling has the potential to reshape Trump’s tariff policies and more broadly, improve U.S. trade relations with the rest of the world. The stakes could hardly be higher. Indeed, Trump was quite specific when he said losing the Supreme Court case would be “devastating for our country.”