U.S. President Donald Trump on Monday warned countries against backing away from recently negotiated trade deals with the U.S. after the Supreme Court struck down his emergency tariffs, saying that if they did, he would hit them with much higher duties under different trade laws.
Trump, in a series of social media posts, said he also may impose license fees on trading partners as uncertainty over his next tariff moves gripped the global economy and sent stocks lower.
“Any Country that wants to ‘play games’ with the ridiculous supreme court decision, especially those that have ‘Ripped Off’ the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to. BUYER BEWARE!!!” Trump wrote on Truth Social.
Trump said that despite the court’s decision to invalidate his tariffs under the International Emergency Economic Powers Act (IEEPA), its decision affirmed his ability to use tariffs under other legal authorities “in a much more powerful and obnoxious way, with legal certainty, than the Tariffs as initially used.”
He suggested that the U.S. could impose new license fees on trading partners but did not provide further details. A spokesperson for the U.S. Trade Representative’s office did not immediately respond to requests for comment on Trump’s plans.
EU Trade Deal on Hold
In Brussels, the European Parliament decided on Monday to postpone a vote on the European Union’s trade deal with the U.S. after Trump said he would impose a new temporary import duty of 15% on imports from all countries.
EU goods under the deal would face a 15% U.S. tariff, with exemptions for hundreds of food items, aircraft parts, critical minerals, pharmaceutical ingredients, and other goods, while the EU would remove duties on many imports from the U.S., including industrial goods.
Trump initially announced the temporary duty under Section 122 of the Trade Act of 1974 at 10% but promised on Saturday to raise it to 15%, the maximum allowed under the statute. An initial 10% tariff came into effect at a minute past midnight on Tuesday, though it is unclear when the 15% rate would take effect, as Trump has only signed an executive order for the 10% tariff so far.
Markets React
Wall Street stocks ended lower on Monday as renewed tariff uncertainty following the Supreme Court decision, coupled with concerns about AI-fueled disruption, unnerved investors.
- The Dow Jones Industrial Average fell 1.65%
- The S&P 500 fell 1.02%
- The Nasdaq Composite fell 1.01%
The dollar weakened against the euro and the yen, reflecting market anxiety over potential trade escalation and economic uncertainty.
Global Trade Uncertainty
The path forward for Trump’s foreign trade deals remains unclear:
- China has urged Washington to scrap tariff measures.
- The EU has frozen its approval process.
- India delayed planned talks.
The U.S. Trade Representative, Jamieson Greer, said the administration expects to open new Section 301 unfair trade practices investigations on several countries, potentially paving the way for new tariffs.
Meanwhile, a group of 22 Democratic U.S. senators introduced legislation to force the Trump administration to issue refunds for all now-illegal IEEPA-based tariffs within 180 days, although the bill faces an uncertain path to a vote.
Trump also criticized the Supreme Court justices who ruled against him, including two he appointed, and expressed concern that the Court could rule against his administration in a forthcoming birthright citizenship case.
Analysis
Trump’s latest moves reflect his ongoing use of tariffs as a negotiating tool and political messaging device, rather than a targeted economic strategy. By threatening higher tariffs and potential license fees, he is signaling to trading partners that backing away from deals could carry immediate financial consequences.
However, the approach carries multiple risks:
- Market Volatility: Investors are already responding with caution, as uncertainty over tariffs can disrupt supply chains, raise costs for U.S. companies, and weigh on stock prices.
- Diplomatic Strain: Allies such as the EU, as well as emerging partners like India, may view the moves as destabilizing, complicating future trade negotiations.
- Legal Vulnerabilities: Section 122 of the Trade Act has rarely been invoked, and using it in place of IEEPA may invite further litigation, leaving Trump’s administration open to judicial challenges.
- Global Trade Ripple Effects: A 15% tariff on broad imports could increase prices for U.S. consumers, provoke retaliatory tariffs, and shift global supply chains, particularly in sectors like tech, automotive, and pharmaceuticals.
Economists suggest that while Trump’s threats may pressure trading partners, the overall economic rationale is weak, since the U.S. is not in a balance-of-payments crisis, and broad-based tariffs risk collateral damage to U.S. businesses and consumers.
In sum, Trump’s tariff strategy highlights a blend of economic pressure and political signaling, but it comes with high uncertainty and potential unintended consequences for both the U.S. and global markets.
With information from Reuters.