Has Donald Trump misplaced his strongest tariff weapon? | EUROtoday

Even by Donald Trump’s requirements, 2026 has been unusually frenetic.

From the ousting of Venezuela’s Nicolas Maduro, to his threats to annex Greenland, to his repeated vows to make use of navy motion in opposition to Iran, so much has been occurring. Amid all these geopolitical upheavals, there may be one key instrument that has just about outlined each of Trump’s presidencies: tariffs.

Trump’s obsession with tariffs goes again a great distance. Those who’ve noticed the US president over the many years say it’s tied to his view of the booming Japanese financial system of the Nineteen Eighties.

Trump fashioned the view that Japan’s financial success was based mostly on what he felt have been the unfair phrases of its financial relationship with the US. He got here to see tariffs as a magic bullet for balancing the phrases of commerce with international locations — a view he has firmly held for greater than 40 years, whatever the nation or the financial dynamics at play.

He usually turns to tariffs when cornered. At the peak of the Greenland disaster, when European leaders strongly rebuked his rhetoric, he threatened tariffs in opposition to those that opposed his plans. His resolute confidence of their effectiveness, whatever the challenge, appears unshakeable.

“I always say tariffs is the most beautiful word to me in the dictionary,” he stated at his Inauguration Day parade in January 2025. “Tariffs are going to make us rich as hell, it’s going to bring our country’s businesses back.”

Trump’s most popular commerce instrument has been eliminated

That’s why Friday’s (February 20) US Supreme Court resolution to rule his emergency tariffs unlawful might be such a defining second of his second time period. Has the US high court docket’s resolution eliminated the primary leverage Trump had for his financial coverage? Will it trigger him to alter course? Or will he merely double down?

Jacob Funk Kirkegaard, nonresident senior fellow with the Peterson Institute for International Economics, advised DW that whereas the ruling does not take away tariffs from the Trump playbook, it could blunt their Impact.

“No matter what happens going forward, this removes Donald Trump’s preferred avenue for making tariffs the issue with which he deals with any foreign policy or any policy issue overall by simply saying, you know, at very short notice, this country gets, you know, 20%, 30%, 50% tariffs,” Kirkegaard stated. “That degree of unpredictability in US trade policy has now gone away.”

However, Trump’s resolution, within the wake of the ruling, to put in a ten% world tariff after which ramp it up the following day to fifteen%, was interpreted by some as an indication that he has no intention of softening his method.

“So much for people who imagined a loss at the Supreme Court would lead to a more restrained trade policy,” Deborah Elms, head of commerce coverage on the Hinrich Foundation in Singapore, stated on LinkedIn.

Not all of Trump’s tariffs have been invalidated both. Tariffs on metal, aluminum and vehicles — sectors of explicit curiosity to China and the EU — stay in place. The Trump administration can also be exploring methods to impose extra tariffs underneath totally different statutes.

Yet so lots of the so-called reciprocal tariffs Trump imposed on international locations world wide have been taken off the desk and changed with the new world tariff. This new tariff already has an expiry date of 150 days as a result of authorized restrictions and wishes the US Congress’s approval to be prolonged.

What’s the way forward for Trump’s commerce offers?

The most instant query governments world wide now face pertains to the commerce agreements they struck with the US to cut back a lot of the “Liberation Day” tariffs. Will the Supreme Court resolution tempt the likes of India or the EU to drag again from the offers they’ve performed, within the hope of securing higher phrases?

Experts say international locations are unlikely to permit present offers to immediately collapse, as they concern potential retaliation from the US additional down the road, as soon as the authorized scenario has develop into clearer.

“From our recent conversations with governments, we aren’t expecting to see any jurisdictions immediately walk away from the agreements that have been inked in recent months,” Andrew Wilson, deputy secretary-general of the International Chamber of Commerce, advised the Financial Times.

They add that these international locations which have already negotiated tariff charges of round 15% with Trump could be joyful to go away issues as they’re.

However, preliminary reactions from EU leaders corresponding to German Chancellor Friedrich Merz and French President Emmanuel Macronsuggest a perception that tariffs could be coming down for European exporters. The EU could but pause the ratification course of for the EU-US commerce deal, with the European Parliament’s commerce committee as a result of maintain an emergency assembly on Monday.

Kirkegaard says that from an EU perspective, Trump’s new world tariff of 15% would doubtless already render the commerce settlement damaged, as that price might be on high of the already agreed 15% price.

“That would be unacceptable to the EU, and therefore we will have to see what the specific legal guidance with regard to transatlantic trade coming from the Trump administration will be,” he stated.

Earlier this month, India and the US reached an interim commerce settlement, which noticed India comply with an 18% “reciprocal tariff.” Following Friday’s ruling, India has delayed plans to ship a commerce delegation to Washington for a gathering between the 2 sides to finalize the textual content of the deal, as a result of start on February 23.

“Some deals — such as those with Switzerland or India — made explicit reference to the emergency tariffs, as the new tariff rates were framed as reductions from those emergency levels. As the legal reference tariff rate has now disappeared, these deals might have to be redrafted,” stated Carsten Brzeski, Global Head of Macro for ING Research.

All eyes on Trump’s China go to

If Japan was the gateway drug for Trump on tariffs, China has develop into his most enduring repair.

The ruling has added a complete new dynamic to Trump’s deliberate go to to Beijing on March 31. When Trump launched his “reciprocal” tariff blitz final April, levies on China hit 145% at one stage. The two sides reached a fragile truce in May, considerably lowering the tariffs.

At first look, Friday’s ruling appears to offer Beijing a key benefit in any future commerce talks, on condition that one of many essential levers Trump has used in opposition to China seems to have been taken away.

However, analysts say that China can be cautious to keep up calm forward of the assembly subsequent month.

“It will give China a moral boost in their negotiations with Trump’s team ahead of the summit, but they are prepared for the scenario that nothing actually changes in reality,” stated Sun Yun, director of the China program on the Stimson Center, a Washington-based suppose tank.

Ali Wyne, an professional on US coverage towards China on the International Crisis Group, says Chinese President Xi Jinping is not going to “flaunt or brandish” the Supreme Court ruling when the 2 sides meet and is as a substitute more likely to concentrate on sustaining constructive relations with Trump.

Several analysts have identified that whereas Trump has misplaced his simplest way for issuing tariffs, he nonetheless has different methods — and that is unlikely to be misplaced on China or different international locations, who could have an eye fixed on extra favorable phrases, however who see sustaining constructive relations with Trump as the easiest way to attain it.

Will Trump take the off-ramp provided by the SC ruling?

Some have speculated that the ruling may present Trump with a political off-ramp for his tariff insurance policies, on condition that they’ve develop into unpopular with voters in an financial system nonetheless grappling with persistent inflation.  A Washington Post-ABC News-Ipsos ballot launched on Friday discovered that 64% of voters disapproved of his dealing with of tariffs.

Then there’s the truth that many in Trump’s personal Republican Party are vital of his tariff coverage, notably with the US mid-term elections as a result of happen in November. A number of Republican members in each the US House of Representatives and Senate have at instances voted to rebuke and curtail the tariffs on commerce companions corresponding to Canada.

“We don’t think that President Trump will use the ruling as a backdoor option to back down on his tariff agenda,” stated Brzeski. “On the contrary, announcements since the Supreme Court’s ruling strongly confirm that Trump has no intention of removing his ‘most beautiful word’ from the English dictionary.”

Trump has very pointedly declined any off-ramp, for now.

“I have the right to do tariffs, and I’ve always had the right to do tariffs,” he stated after Friday’s ruling.

That stays true, however clearly not in the best way he beforehand thought. Precisely how that can affect the effectiveness of his go-to coverage instrument will develop into obvious within the months forward.

Edited by: Ashutosh Pandey