Trump's Tariff Empire Under Fire -- Court Ruling Could Flip Global Trade on Its Head
Trump's favorite tariff tool just got slapped down in courtand while the appeals bench hit pause on that decision, the damage could already be done. A federal trade court ruled Trump overstepped by using emergency powers under IEEPA to push broad levies on U.S. allies and rivals. If the ruling sticks, it could roll back two-thirds of those tariffs and sink the effective U.S. tariff rate from nearly 27% to under 6%, according to Bloomberg Economics. That's not just a legal blowit's a blow to the core of Trump's trade leverage heading into election season.
The White House isn't out of options, but none of them are quick or clean. Trump could fall back on older laws like Section 232 or 301, which allow for tariffs on national security or unfair trade groundsbut those come with long timelines, more paperwork, and tighter restrictions. Yes, he can pivot, said Capital Alpha's James Lucier. But he's running out of time to make it count before the midterms. Trade advisor Peter Navarro insists the tariff agenda is alive and well, but any new approach will likely take monthsnot daysto materialize. That uncertainty alone could rattle global supply chains that have already been stretched thin.
For companies exposed to cross-border tariffs, this isn't just noiseit's strategy-altering. Tesla (NASDAQ:TSLA), which relies heavily on complex global sourcing, could face new cost risks if tariffs return through different legal doors. And industries like steel, autos, and semiconductorssome already caught in prior Section 232 probesmight get pulled back into the spotlight. With a court-imposed June 9 deadline looming and the Supreme Court now in the mix, investors should expect this legal fight to shape not just headlines, but actual trade flows and margin forecasts heading into the second half of 2025.
This article first appeared on GuruFocus.
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