The world is abuzz with the US Supreme Court's decision to limit President Donald Trump's tariff powers, sparking immediate reactions from governments and markets worldwide. The ruling has left countries grappling with the legal and economic fallout, raising questions about ongoing agreements, tariff reductions, and the legality of past duties. Here's a breakdown of how various nations are responding to this significant development.
South Korea
South Korea, a close US ally, is reviewing its trade deal with the US, which lowered tariffs from 25 to 15 percent in exchange for $350 billion in investments. The presidential office, Blue House, has indicated that the deal will be under careful review, with changes likely. This is particularly relevant for major South Korean companies in chemicals, pharmaceuticals, and semiconductors, which would still pay a lower rate even with the new 10 percent tariffs.
However, exporters of automobiles, which go mostly to the US, remain subject to the 25 percent tariff, and steel exports are hit with 50 percent duties under Section 232, unaffected by the ruling. The South Korean government is expected to move cautiously, as exports account for 85 percent of the country's GDP, with the US as the second-largest market.
India
India, which faced some of the highest US tariffs under Trump's emergency trade powers, has seen a framework trade deal with the US. Trump claimed that Prime Minister Narendra Modi agreed to stop buying Russian oil, and US tariffs would be lowered to 18 percent for India's top exports to the US. However, India said it will eliminate or reduce tariffs on US industrial goods and agricultural products.
Critics argue that New Delhi should have waited for the US Supreme Court decision before finalizing the deal. Political economist MK Venu noted that Trump was eager to finalize the deal, which includes a commitment to buy $500 billion in new imports from the US over five years. While India welcomed the tariff reduction, uncertainty remains over negotiations, as the Supreme Court ruling affects the legal basis of past tariffs.
China
China's reaction to the Supreme Court ruling has been muted, with the country still on the Lunar New Year break. The Chinese embassy in Washington issued a statement noting that trade wars benefit nobody and that the decision is likely to be broadly welcomed in China, a primary target of Trump's tariff policies.
Since last April, China has faced multiple layers of tariffs, including 10 percent on chemicals used in fentanyl production and 100 percent on electric vehicles. Analysts estimate that the overall tariff level could fall from 36 percent to 21 percent, providing some relief to an economy already strained by the COVID-19 pandemic and a prolonged property market crisis.
Canada
Canada has welcomed the US Supreme Court's decision but pointed out that challenges remain. Regional leaders across the country have signaled that the ruling is a positive step, but Minister for Canada-US trade Dominic LeBlanc noted that significant work is still needed, as Section 232 tariffs on steel, aluminum, softwood lumber, and automobiles remain in place.
Mexico
Mexico's president, Claudia Sheinbaum, said her government will carefully review the Supreme Court's decision to assess its scope and impact. Mexico's privileged position, especially compared to other countries, is notable, as it is the US's largest trading partner, and the two countries share a vast trading agreement that shields most products from reciprocal tariffs.
Limits of Trump's Tariff Powers
A senior legal scholar, Frank Bowman, emphasized that the US Supreme Court ruling marks a key moment in the legal battle over Trump's tariffs, focusing on constitutional limits rather than economics. Bowman noted that the court has confronted Trump's broader challenge to the rule of law, and the decision is significant in several respects, as it is the first time the Supreme Court has stepped in to address Trump's generalized attack on the rule of law in the US.
