Trump's tariffs were already ever-changing. Now, court fights add to the uncertainty

Australia Broadcast Center

4 days ago

There has been a reprieve for Donald Trump's tariff agenda, but its future remains in doubt.
On Thursday, local time, the ruling by the International Trade Court seemed a devastating blow to Trump's signature "Liberation Day" tariff and his earlier punitive tariffs on Mexico, Canada and China.
The three judges — two appointed by Republicans, one by a Democrat — said the president had overstepped his powers by implementing the tariffs.
The Trump administration was quickly on the offensive, once again attacking what it calls "activist" judges for stymieing its agenda.
It appealed the ruling, arguing the president possessed the power to implement the tariffs to address a self-declared economic emergency.
Later on Thursday, the US Court of Appeals for the Federal Circuit reinstated the Trump tariffs while the ruling is considered.
It means importers will continue to pay the tariffs — at least in the short term.
Trump's second term tariff policy was already tumultuous with multiple alterations to the rates over the past few months.
These court rulings only further muddy already murky waters.
Since his return to office, Trump has shown a passion for exercising the powers bestowed upon his discretion.
He seemed particularly taken with the power of executive orders.
He's signed about 160 of them in his first four months.
For comparison, that's roughly the same number Joe Biden signed in his full four-year term.
The problem with executive orders is that they're bounded by the laws Congress has enacted and can always be overturned by the next holder of the office.
So, most presidents try to marshal the forces of Congress to make new laws, which are far harder to rescind.
But that takes time — and Trump says there are lots of issues that need addressing now.
He says he can't wait for Congress to act.
He's used executive orders to address a range of "national emergencies".
These include an "energy emergency", which he's used to push for more oil and gas exploration; a "southern border emergency", used to direct further resources to halt illegal migration; and the "economic emergency", which he's sought to address with a range of tariffs.
There have been multiple legal challenges to how he's used these declared emergencies to change rules and policies.
It seems all but certain that the most senior court in the land — the US Supreme Court — will eventually need to settle the matter.
It should be noted, though, that Trump has used multiple different powers to implement his tariff agenda.
Not all rely on declarations of national emergencies.
The 25 per cent tariff being levied on steel, aluminium and automotive imports into the US isn't at risk in this case.
It's possible the Trump administration will now move from sweeping country-specific tariffs to more industry-specific tariffs instead.
The White House says it's looking at all options.
US stocks surged after the ruling by the Trade Court, enthusiastic that it could mean a shortened shelf life for the tariffs.
On the whole, investors like much of Trump's economic agenda — particularly the promises of low taxes and less regulation.
They think these policies will lead to higher economic growth, even if it's at the cost of government services or environmental protection.
Let's call these Trump's pro-growth policies.
What investors don't like is his love of tariffs, which push up prices and hurt trade.
Let's call these Trump's anti-growth policies.
Investors are hoping the pro-growth policies are passed by Congress and signed off by Trump, while the anti-growth policies are ditched at some point.
This court decision gives Trump an easy out.
He could claim he fought hard to implement high tariffs to incentivise businesses to bring jobs back to the US — as promised in his campaign — only to see the plan blocked by judges.
Republicans would be hoping that by the time the midterm elections roll around next November, business profits and economic growth are booming because of the tax cuts and deregulation drive — setting them up to hold onto the House and Senate.
Whereas if massive tariffs are kept in place for a prolonged period, American consumers would be confronted with higher prices for imported goods.
Most economists also think the chance of a recession is increased.
Under this scenario, Republicans could instead find themselves asking voters to keep them in charge at a time of major economic insecurity.
While Trump himself won't be up for re-election, he has a lot at stake personally.
If Democrats are swept back into power, it's highly likely he'll again face impeachment.
If his political fortunes have fallen so far that even some Republicans have turned on him, he could even be thrown out of office.
The problem for those who want Trump to take the obvious off-ramp is that he's long espoused the power of tariffs.
It's seemingly one of his longest and most tightly held political beliefs despite current economic orthodox being that broadly imposed tariffs stifle growth.
He's also sensitive to accusations of cowardice.
This week, a reporter asked him about the recently coined term "TACO" — which stands for Trump Always Chickens Out.
It refers to Trump's habit of first imposing massive tariffs before backing away from them.
Trump reacted furiously.
"I chicken out? I've never heard that," he said.
"Don't ever say what you said," he later added.
"That's a nasty question. To me, that's the nastiest question."
But the evidence is mounting that Trump's most outlandish tariff threats aren't implemented for long.
After ratcheting the tariff on most Chinese goods to 145 per cent, he's now dropped it to 30 per cent.
Besides China, none of the country-specific reciprocal tariffs announced on his so called liberation day were ever implemented.
Last week, he threatened to hit the European Union with a 50 per cent tariff — but that too was delayed a few days later.
Still, the universal 10 per cent tariff remains in place for most countries with the threat of a major increase in reciprocal tariffs rates looming.
The risk can't be ignored completely.
When Trump announced a pause on the country-specific higher reciprocal tariffs, it was supposed to allow time to negotiate and then announce a raft of new deals.
Trade adviser and key architect of Trump's trade policies Peter Navarro spoke about securing "90 deals in 90 days", with Trump serving as the chief negotiator.
But about halfway through the 90 days, the only agreement has been with the UK — and that wasn't much of a deal.
No movement on the level of tariff, just some extra access for certain products.
With the legality of Trump's tariffs a live question, it would be understandable for other countries to wait and see how the court battles play out.
While the White House Press Secretary Karoline Leavitt says "Other countries around the world have faith in the Negotiator-in-Chief, President Donald J. Trump," it will be the US court system that determines just how much power he wields in such negotiations.
Trump claims to have two, in some ways contradictory, motives for waging his tariff battle.
He wants to use them to incentivise businesses to bring production back to the US by making it prohibitively expensive to make things overseas.
He also wants to use the threat of tariffs to force other governments to bend to his will, particularly by opening access to their markets for US goods.
The ongoing uncertainty of his legal authority to wage his trade war makes both goals more difficult to achieve.
Business doesn't want to go through the expensive process of moving production if the tariffs won't last, and why would a foreign government try to strike a deal with a leader who doesn't have control of the tariff stick he threatens to wield?