The world has just witnessed a strong legal blow to President Donald Trump's economic strategy. On February 20, the US Supreme Court ruled that citing the International Emergency Economic Power Act (IEEPA) to impose tariffs from 10% to 50% on dozens of trading partners is illegal.
Immediately after this ruling, US President Donald Trump immediately announced that he would switch to applying a 10% global tax based on another law from 1974. However, according to the latest announcement on February 21 on the social network Truth Social, Mr. Trump decided to raise this temporary tax rate from 10% to 15% - the maximum level allowed by law under Article 122. This continuous and rapid shift has caused the international community to simultaneously fall into a state of waiting and assessing the situation.
In Asia, South Korea welcomes the invalidation of the 15% tariff on its goods but affirms that it will continue trade negotiations with the US. Indonesia, which just finalized the 19% tariff on February 19, said it is closely monitoring the new tariff order.
China has not yet made an official comment because it is on holiday. The court's ruling was issued on the same day Mr. Trump announced his plan to visit Beijing at the end of March to hold talks with President Xi Jinping. Experts believe that when there is no longer IEEPA tariff leverage, Washington's negotiating position will be significantly reduced.
In Europe, European Union (EU) officials are expected to hold an emergency meeting on February 23 to re-evaluate the trade agreement with the US. French President Emmanuel Macron and Italian Foreign Minister Antonio Tajani both said that removing tariff barriers is a positive sign to cool down tensions. Meanwhile, the UK chose to remain silent because key commodities such as steel and automobiles have already enjoyed incentives before.
In the Americas, the two largest trading partners, Mexico and Canada, breathed a sigh of relief when the White House confirmed that they were exempt from the new 10% tariff thanks to the USMCA Agreement.
Brazilian President Luiz Inácio Lula da Silva and Indian Prime Minister Narendra Modi also agreed that more time is needed to study the spillover effects of this ruling.
According to Bloomberg estimates, the US government has collected about 170 billion USD from emergency tax orders that have just been declared illegal. Thousands of importers are stirring to sue to reclaim this huge amount of money.
Despite the ruling, Mr. Trump still showed an extremely tough attitude. The US President warned that the refund process would be prolonged for many years in court, and pledged to use other legal tools to collect taxes that are even many times larger in the future.
With Article 122 just activated, Mr. Trump declared that he would take advantage of this time to promote other sanctions tariffs based on national security in response to countries that have "taken advantage" of the US for decades.
