On February 20th, the United States President Trump stated that following the Supreme Court ruling declaring the comprehensive tariffs invalid, the outlook for some trade agreements reached with foreign countries is uncertain.
The Supreme Court ruled that the President’s implementation of his comprehensive tariff policy, under the International Emergency Economic Powers Act (IEEPA), was in violation of the law. These powers were the basis for trade agreements reached with major trading partners including China and the European Union.
These agreements granted tariff rates to trade partners lower than those threatened by the President, in exchange for their commitment to purchase more American goods and increase investment in the United States.
During a White House press conference, Trump was asked about the trade agreements reached with foreign countries. He stated that many of these agreements will remain valid, but “some agreements will be invalidated and replaced by other tariffs.”
He said, “Some agreements are effective, many agreements are effective, but some agreements are ineffective and will be replaced by other tariff measures.”
He added that all agreements are being enforced, but the methods of enforcement may vary.
After taking office, Trump invoked the IEEPA involving two aspects. The first was imposing “equal” tariffs on imported goods from almost all foreign trading partner countries. The second was invoking the same law to impose tariffs on China, Canada, and Mexico, citing a national emergency due to the smuggling of fentanyl and illegal drugs into the United States.
He became the first president in U.S. history to impose tariffs using the IEEPA, and his decision has faced numerous legal challenges, ultimately resulting in appeals to the Supreme Court.
The tariffs levied by Trump under the IEEPA are categorized into three types: tariffs related to fentanyl, equal tariffs imposed on foreign countries to reduce the U.S. trade deficit, and punitive tariffs imposed on certain countries.
Tariffs related to fentanyl:
– Mainland China and Hong Kong: The previous tariff rate was 20%, reduced to 10% after reaching agreements.
– Mexico: Imposed a 25% tariff on goods not within the framework of the U.S.-Mexico-Canada Agreement (USMCA).
– Canada: Imposed a 25% tariff on goods not within the USMCA framework.
Equal tariffs:
– Trump imposed tariffs ranging from 10% to 50% on goods from all trading countries except Russia.
– Many trading partners have reached trade agreements with the U.S., lowering the tariff rates, including the European Union, Japan, and South Korea (rate reduced to 15%), as well as some Southeast Asian countries (rates reduced to 19% to 20%).
Punitive tariffs:
– Brazil: Imposed a punitive tariff of 40% on Brazil, bringing the total tariff rate to 50%.
– India: For purchasing Russian oil, India was subjected to a 25% punitive tariff, resulting in a total tariff rate of 50%. In early February, Trump tweeted about reaching a U.S.-India trade agreement, reducing India’s tariff rate to 18%.