One could be forgiven for thinking the jubilation in many quarters over the US Supreme Court striking down President Trump’s tariffs means it was a good day for free(ing) trade. The reality is far muddier – and a messier picture for business is already emerging.
A temporary amended replacement framework is already upon us, and that’s unlikely to hold for anything longer than five months, whereupon the new system will likely become a patchwork system of customs duties mixed together with far less clarity than before. Donald Trump is not to be denied, and he has unsurprisingly upped the ante in response to the Court telling him no, from changing his mind overnight on the maximum current tariff threshold to trailing the possibility of all-out country embargoes.
Just to give an example of the chaos currently facing those trading across the US border, the new tariff rate was confirmed only hours before the deadline for his now-invalidated previous tariffs expiring went into effect. And the notice finally issued by American customs authorities implemented, not what his most recent policy-by-social-media post had asserted of 15%, but rather the original lower rate of 10% Trump had issued over the weekend. A truly moving target that will only continue to oscillate in the weeks and months ahead.
As for getting your money back, depending on who you listen to, it could be a matter of months or years as the decision-making process unwinds. The Supreme Court was largely silent on the matter of tariff refunds, and despite leveraging the prospect of them previously to argue the government’s case for upholding the previous tariffs, the administration is now pointing to the lower courts to resolve the matter. Chasing refunds could become a Wild West affair, with only those large enough to pursue costly litigation over time able to see that light at the end of the tunnel.
So, what’s next, and where does the UK fit in? The question of Congress’ involvement, despite being the basis on which the Supreme Court annulled Trump’s previous tariffs, is very much an open one. Few Republicans want to own the messy tariff agenda in a year of mid-term elections for the legislature. Moreover, the president has repeatedly spurned the relevance of Congress in re-asserting his continued authority albeit by alternative means, most recently in his State of the Union address earlier this week, where he further contended the wars he had helped end were helped by the threat of tariffs.
Those different means are likely to include a mix of sector-wide duties - expanding on the existing steel and auto ones - and revived country-specific duties through “investigations” of what the US deems to be unfair trade barriers from its trading partners. In the UK’s case, Trump’s administration has consistently criticised its online safety legislation alongside the EU’s, contending that it unfairly discriminates against US tech companies and turning it into an ostensible free speech matter.
Despite the recent Chagos Islands saga, the UK still retains far more affection in Trump’s eyes and is likely to continue its ‘keep calm and carry on’ approach to negotiating behind closed doors, rather than threatening retaliation like some in the EU.
That approach may continue to be rewarded with the best-of-a-bad-bunch treatment it has received so far from Washington, and it is worth noting that despite the new universal 10-15% baseline, the UK still continues to receive preferential terms on existing and potentially future US sectoral tariffs through its framework deal struck last year. But not without conceding further pounds of flesh.
Trump is still the tariff man, and the tariff man is determined to use whatever levers he can to bounce trading partners into negotiations for the purposes of claiming victory. If treading water with the US is the best UK can do, it may yet still leave us in a better place than many. It just requires the excruciating humility to be realer than most about the realpolitik of the current global trading environment.