US Supreme Court Ruling on Trump's Tariffs

The United States Supreme Court has rejected Donald Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose country-specific tariffs. This decision has drawn significant public attention and criticism from Trump himself.

Impact and Compliance with WTO Rules

• The IEEPA tariffs were likely illegal under World Trade Organization (WTO) rules due to their violation of the principle of equal treatment.
• Trump has since implemented a new 10% tariff under Section 122 of the Trade Act of 1974, moving the US closer to global trading compliance.

Effect on Tariffs and International Trade

The new tariffs result in varying effective rates for different countries:

• China: From 36.8% to 26.9%
• India: From 22.3% to 13.9%
• Vietnam: From 21.6% to 16%
• Indonesia: From 23.5% to 16.4%
• Thailand: From 19.4% to 14.8%
• Japan: Increase to 13.5%
• South Korea: Increase to 12%

However, the European Union and the United Kingdom face less favorable conditions post-ruling due to bilateral concessions already made.

Reconstruction of Tariffs

• The Trump administration plans to restore tariffs using Section 232 (national security) and Section 301 (unfair trade practices) of the Trade Act of 1974.
• These sections allow discretionary investigations, potentially reinstating previous tariffs.

China's Temporary Relief

• China benefits temporarily from the ruling; however, tariffs could return based on prior investigations and reviews.
• The Biden administration found continued unfair practices by China, justifying possible new tariffs.

Challenges and WTO Limitations

• Countries can challenge unfair tariffs at the WTO, but the organization has been inquorate since 2019 due to US blocking of judicial appointments.
• Previous WTO rulings against Trump's tariffs lacked enforceability due to the non-functioning Appellate Body.

US Leverage in Global Trade

• The US can leverage its market and security dependencies to extract concessions, deterring other countries from litigating at the WTO.
• Security considerations often outweigh litigation benefits for countries like Japan, South Korea, and some European nations.

In conclusion, while the Supreme Court's decision alters the legal landscape of US trade policy, it is unlikely to significantly lower overall trade barriers.

The author is a professor of finance and economics at Columbia Business School and Columbia University’s School of International and Public Affairs.