Trump says the Supreme Court decision is a ‘disgrace’ and that he will find other ways to impose them, according to CNN.
The thing is, IEEPA tariffs are immediately voided and that’s 60% of tariff revenue. I’d imagine there is rush to get those over the border and that’s going to create a huge trade deficit in Feb/March. This could be one of those things where Apple is chartering flights again.
First, I’m interested in short-term trading flows here. Aside from a brief administrative delay, tariffs will stop being collected immediately and that should create a rush to get imports over the border. That could be an extended period where the ‘investigations’ under other tariff authorities are conducted but in any case, there’s a big incentive to build inventories.
Secondly, this decision really hamstrings Trump’s ability to reconstitute tariffs. I think the market is taking him at his word because it’s a complicated decision but that’s not wise. The courts will require real investigations and justifications on national security grounds and the days of flimsy tariffs are over, particularly as a negotiation tool.
This particularly applies to Europe and the UK, which are now in much stronger negotiating positions. In that light, the UK’s rush to make a deal with the US was a tactical mistake in contrast to the slow rolling from the EU.
One thing to watch Section 122. Under it, The President can impose a temporary import surcharge of up to 15% to address significant balance-of-payments deficits. It makes the most sense not as a permanent replacement but as a bridge — you slap on a 15% across-the-board surcharge to stop the bleeding, maintain some negotiating leverage, and buy yourself time while Section 232 investigations conclude and Section 301 investigations get underway. The Tax Foundation estimated it could replace 56-73% of IEEPA revenue depending on the rate chosen.
As for the timing of Section 122, it says that Congress must be notified and consulted so there is some administration.
