Stock markets rise after US Supreme Court rejects Trump's tariffs
Stock markets, especially in Europe, rose after the US Supreme Court ruled that president Donald Trump's current import tariffs are illegal. However, the decision also threatens to cause considerable chaos and uncertainty. While many importers are likely to initiate legal reimbursement proceedings, the Trump administration will probably switch to a plan B, with different tariff provisions.
The US Supreme Court has declared a large part of president Donald Trump's import tariffs unlawful. Trump invoked the International Emergency Economic Powers Act (IEEPA) to do so, but according to the judges, that law does not give the president the authority to do so. He needed the “clear authorisation of Congress”, they say. Both Trump's “reciprocal tariffs” and the subsequent deals are now up in the air.
The stock markets reacted with relief to this decision, with European stock markets in particular seeming to benefit greatly from a possible abolition. For car manufacturers in the more expensive range, such as BMW, Porsche, Volvo Cars and Mercedes, the 15 per cent tariff that Trump imposed on exports from the EU was a major setback. After the announcement, the shares of Porsche rose 2 per cent. BMW and Mercedes shares also rose.
However, the decision also threatens to cause a great deal of chaos and uncertainty. For example, many importers are likely to initiate legal reimbursement proceedings. According to Bloomberg, at least a thousand companies are ready to file a lawsuit against the US government, including a claim for damages. Among them are well-known listed companies, such as tyre manufacturer Goodyear. According to recent estimates by Reuters, Trump's import tariffs have already generated roughly 175 billion dollars for the US Treasury.
The Trump administration is also expected to switch to a plan B. The administration still has ways to impose import duties without the intervention of Congress, but these are much less flexible, more cumbersome and also subject to legal appeal.
Within all possible trade laws, there are so-called sections that give the US president specific powers. They enable Trump to punish unfair competition, restrict imports if they are considered a threat to national security, address major trade imbalances or provide temporary protection to certain sectors.
The European Commission announced that it will carefully analyse the US Supreme Court's decision. “We remain in close contact with the American administration to obtain clarity on the steps it will take in response to the ruling,” it said. “Companies on both sides of the Atlantic depend on stability and predictability in trade relations. We therefore continue to advocate for low tariffs and are working to reduce them.”
Illustration © PHOTO Daniel ROLAND / AFP
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