As might be expected from an aggressive executive under the second Trump administration, it is hard to imagine the executive bowing to another branch of government. In a reflection of that anticipation, using Section 122 of the 1974 Trade Act, Mr Trump has doubled down by imposing 15 per cent reciprocal global tariffs on all countries, following an initial announcement of 10 per cent tariffs. In effect, these decisions are meant to serve the twin purpose of countering the Supreme Court’s ruling and compensating for the estimated economic gains lost due to the erstwhile tariffs. On the ground, the real-time implications of Mr Trump’s retaliation to the Supreme court’s ruling may be difficult to estimate just yet, specifically, as the as the new ruling announced by Mr Trump does not apply across the spectrum. Certain agricultural products, beef, foreign autos, aluminium and steel are some of the products that may be shielded from the current tariff back-and-forth, as they either have been spared by earlier carve-outs or fall under national security-related sectors. The resultant uncertainty is going to affect consumers inside the US as well as countries across the globe.
For states trading with the US and at the receiving end of Mr Trump’s tariffs, especially India, the duality brought about by the tussle between its judiciary and the executive should be a moment of pause. While the Supreme Court’s decision may be laudable, betting on the judiciary to override the executive consistently and prevail may be a risky bet — especially so when the Supreme Court currently has a conservative supermajority with six conservative judges against three liberals.
Much of the credit for the current Supreme Court’s decision striking down Mr Trump’s tariffs has been accorded to the splintering among two of the six conservative judges who crossed over to join Chief Justice John Roberts — Justices Neil M Gorsuch and Amy Coney Barrett. These developments reflect a churn within the US governance system and appear to be an outcome of internal readjustments, less so a function of external pressure. At best, the Court’s leanings on external factors may have been influenced by the consideration of America’s status as a global leader in the face of punitive tariffs.
The new ruling to end Mr Trump’s emergency tariffs is bound to create confusion and uncertainty among trade partners and companies. The fact that Mr Trump has warned nations to stick to their respective trade deals may be a clear signal that nations whose hands were forced to negotiate a trade deal that was less favourable to them than the US, especially compared to past arrangements, will grab the first opportunity to reverse to the status quo ante.
For countries that have agreed to levy zero tariffs on the US, like Indonesia, the current uncertainty would seem like an opportunity. However, Mr Trump has made the explicit threat to make use of “other alternatives” to circumvent the Supreme Court’s decision. In particular, Mr Trump has three key arsenals — Section 122 of the Trade Act of 1974, which allows the President to impose tariffs on grounds of addressing balance of payment deficits; Section 301 of the US’ Trade Act of 1974,which allows tariffs on a trading partner for “unfair trade” practices; and tariffs based on Section 232 of the US Trade Expansion Act of 1962, which are levied on specific sectors on grounds of national security. The expansive scope of these laws within the reach of the executive branch under Mr Trump can hardly be overstated. All these can again be challenged in court but one thing is certain, the blunting of IEEPA may have dealt a blow to the weaponisation of tariffs.
Regardless of how opportunistic or banal the latest Scotus ruling may appear to other trading partners of the US, it is a monumental development constitutive of a pushback against an unrestrained executive. Coming from a judiciary that has been seen as favourable to the Trump administration, this decision is more consequential and symbolic. It hands the Trump administration a definitive setback that complicates Mr Trump’s economic and political agenda, even as it approaches the midterm elections later this year. Internally, the current ruling sets the stage for other key rulings anticipated from both inside and outside the US. From India’s perspective, a key legislation for debate is the one on the validity of birthright citizenship in the US. The ruling could reshape the people-to-people connect, which has strongly undergirded the bilateral relationship between the US and India for decades.
The authors are, respectively, vice-president and fellow (Americas), Observer Research Foundation
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