Tariffs appeal could divide US top court unpredictably

The United States has historically championed free trade, particularly after World War II. It played a key role in establishing the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO) , both promoting reduced trade barriers. While the US h a s negotiated numerous Free Trade Agreements, its commitment to free trade has recently been a topic of debate, especially with the rise of protectionist sentiment. President Trump has made tariffs on imports from other countries the central plank of his administration’s trade policy.

Trump’s tariffs, while intended to boost domestic production and jobs, are having a complex set of global and domestic economic effects. While the tariffs are designed to protect specific domestic industries and raise revenue, the overall economic impact on the US and the global economy is turning out to be negative, resulting in reduced trade, higher costs, and decreased growth. The tariffs are sparking intense uncertainty in the US and it is unclear how it will all end. The full impact of these tariffs is still unfolding, and economic projections may vary depending on how consumers , businesses , and governments respond .

Advertisement

The implementation of Trump’s tariffs could significantly impact economic growth within the US. There’s also on-going uncertainty about the legal basis of these tariffs, particularly regarding the administration’s reliance on the International Emergency Economic Powers Act (IEEPA), which could be challenged in court. Against this background, it is not surprising that multiple cases had been filed in the US Federal Courts against the Trump Administration’s tariffs. The main legal challenge centres on whether the IEEPA gives the President authority to impose tariffs without specific congressional approval. While the IEEPA grants the President broad economic action powers during national emergencies, it does not explicitly mention tariffs.

Challengers argue that tariffs are a matter for Congress to decide, while the administration contends IEEPA’s powers include imposing tariffs. Other arguments concern whether the reasons for the tariffs qualify as an “unusual and extraordinary threat” under IEEPA and broader constitutional limits on executive power. Some days ago, the Federal Circuit ruled by a 7-4 decision that the tariffs which Trump brought in through emergency economic powers act did not fall within the president’s mandate and that setting levies was “a core Congressional power”.

The Court of Appeals ruled that Trump overstepped his presidential authority when he implemented the steep levies. In a petition filed in the US Supreme Court , the Trump administration has asked the justices to quickly intervene to overturn the judgement of the Appeals Court and to rule that the President does have the power to impose such import tariffs on foreign nations. The president has warned that “our country is going to suffer greatly” if the Supreme Court upholds the lower court’s decision on the tariffs.

The outcome in the case is not guaranteed, and various factors could influence the Supreme Court’s decision. Some US analysts suggest the 6 -3 conservative majority in the Supreme Court could lean in Trump’s favour. However, others point out that the legal challenge is based on fundamental constitutional principles and could divide the court in unpredictable ways. Economists say that the tariffs are slowing down U.S. economic growth, while inflation has also ticked upwards.

In his piece ‘Trump’s Tariff Tantrums Are Hobbling the U.S Economy’, Jeffrey A. Sonnenfeld, Professor in the School of Management at Yale University has stated that tariffs have fundamentally disrupted markets , leaving businesses vulnerable to the double threat of uncertainty and cost inflation. John Mearsheimer, a leading American international relations expert and Professor of Political Science at the University of Chicago, has said that the Trump administration’s India policy is a “colossal blunder” and asserted that secondary tariffs on India for buying Russian oil “won’t work.” Trump’s former National Security Adviser (NSA) John Bolton has said that he (Trump) “has shredded decades of efforts” made by the West to strengthen diplomatic and strategic ties with India with his “disastrous” tariffs.

Meanwhile, global trade continues to be destabilized by the on-going tariff battles. According to the UN Conference on Trade and Development (UNCTAD), the rules-based global trading system has been weakened, and countries are increasingly resorting to tariffs to pursue domestic policy goals. As a result, many countries are engaging in bilateral negotiations to navigate and mitigate the effects of the U.S. tariffs. India is also actively pursuing and expanding its bilateral trade network as a key part of its economic strategy. This strategy of diversification is to some extent a response to trade uncertainty with the U.S. and is intended to provide India with greater negotiating leverage.

(The writer, a retired IFS officer, served as India’s Ambassador to Kuwait and Morocco and as Consul-General in New York.)