The decision by the US supreme court to rule that a key part of president Donald Trump’s tariffs programme was illegal is a key moment in the presidency. It is the first time Trump has faced serious pushback from the court, an encouraging indication that the division of powers in the US constitution still means something. And, despite the administration’s claims that different legislative routes can be found to impose fresh tariffs – protecting a key part of the president’s policy– this will be far from straightforward.
The court’s decision, confirming the finding of lower courts that Trump had exceeded his legal authority in imposing a large part of his tariffs programme, had been anticipated. Nonetheless, the administration’s response was typically lacking in convincing detail. First a new global tariff of 10 per cent based on different legislation was announced. Then, on Saturday, the rate on this tariff was increased to 15 per cent.
A key finding of the supreme court was that Trump should have sought congressional approval for his tariffs. While the administration has threatened to proceed without reverting to congress – using different legislation – this will be complicated and difficult. Further legal challenges will follow, along with repayment demands on the tariffs already judged to be illegal.
Trump’s tariff agenda has suffered a setback and is now likely to proceed more slowly. This is welcome. Political factors and fears about the impact on the cost of living will also stay his hand. Notably for Ireland, pharma is one of a small number of sectors which have been excluded from the new global tariffs, for fear of pushing up drug prices.
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What happens next is unpredictable. A key issue for Ireland is what happens to the EU/US trade deal, which has been agreed in outline, but not yet come into force. The deal had capped potential tariffs in all sectors at 15 per cent, including pharma, which is currently not subject to any charge.
The European Parliament, where a key committee will assess the deal on Monday, and EU member states will want clarity from the US on the plans for the new global tariff and how it would fit in with existing charges. They will realise that an angry president may act in unpredictable ways.
It may be that the deal remains the best way forward, avoiding the danger of further US action. The European Commission was correct on Sunday to insist its terms be respected. Tme will be needed now to see how events play out. The president’s room for manoeuvre on tariffs is constrained, but Europe will still want to avoid an economic war with Washington.
With the mid-term elections looming, Trump may also face domestic political pressures. Perhaps congress may be emboldened to become more assertive in the face of his destructive agenda. As the supreme court decision showed, checks and balances do exist.
