After the court decision against the aggressive US customs policy, the European Commission wants to continue to advocate for low tariffs. A commission spokesman said they are in close contact with the US government to find out how they want to react.
“Businesses on both sides of the Atlantic depend on stability and predictability in trade relationships. We therefore continue to advocate for low tariffs and work towards reducing them.”
The US Supreme Court has ruled that US President Donald Trump exceeded his authority when he invoked emergency law to impose sweeping tariffs on trading partners – including the European Union. With the ruling, Trump’s far-reaching tariffs lack a legal basis.
However, Trump’s team had already announced that, in the event of a defeat in court, they would try to resort to other legal bases in order to continue to enforce the US President’s customs policy.
MP: also crucial for customs agreements
The European Union and USA agreed on a customs agreement in the summer. The European Parliament is currently working on the implementation of the agreement. “Since a large part of the so-called reciprocal tariffs is based on the now disputed legal basis, neither the US government nor the European Union can simply go back to business as usual,” said Bernd Lange, chairman of Parliament’s Trade Committee. He called a special meeting of the EU Parliament’s negotiating team and legal service on Monday.
The agreement provides for duty-free imports of US industrial goods. In return, the USA committed to limiting tariffs on most EU imports to a maximum of 15 percent. As a result, customs duties on cars were reduced.
Which tariffs are affected by the decision?
All tariffs that Trump established by citing the emergency law IEEPA are affected. The Republican is the first US president to use the law for his tariff policy. Lower courts had already decided in the Supreme Court that this was not legal after several US companies and states had sued against it.
Among other things, Trump relied on the law for his so-called reciprocal tariffs, which he justified with alleged imbalances and disadvantages for the USA in international trade. This includes the tariff rate of 15 percent that currently applies to the import of most EU products into the USA. In addition to the EU, dozens of other US trading partners are also affected by the tariffs, which vary by country.
In his second term in office, the US President also imposed surcharges on imports of goods from Canada, Mexico and China. His reasoning: The countries are not doing enough to combat the spread of drugs like fentanyl or illegal migration. These tariffs are also based on the emergency law.
Which tariffs will definitely remain in place?
The US Supreme Court has not ruled on tariffs on specific products for which the US government used a different legal framework. Citing a section of the 1962 Trade Expansion Act, Trump imposed tariffs on steel, aluminum and automobiles. These tariffs continue to apply.
Does the US government now have to immediately lift the affected tariffs?
The court did not set a deadline for lifting the tariffs. However, the decision no longer provides a legal basis for the measures. The ruling does not regulate how and how quickly the government must administratively withdraw the tariffs. The practical implementation – such as adjusting the customs tariff or possible refunds – lies with the responsible authorities. The US Court of International Trade, for example, decides on disputes.
What does the ruling mean for the EU and Germany?
After the court decision, this was initially unclear. In an initial reaction, the EU Commission said that it wanted to analyze the judgment carefully. It is important that there is “stability and predictability” for companies on both sides of the Atlantic. “We therefore continue to advocate for low tariffs and work to reduce them,” said a Commission spokesman in Brussels.
Brussels had previously assumed that Trump’s government – as it announced – would now look for a new legal basis for its tariffs and that they would then remain valid. For trading partners like the EU, for consumers and markets, the decision means one thing above all: renewed uncertainty.
How does Trump react to the decision?
For Trump, who likes to praise his tariffs as a panacea for securing domestic jobs or resolving conflicts, this decision is a bitter defeat. He did not initially comment immediately after the decision. The day before, he had appeared confident of victory: “The wording is clear: As President, I have the right to raise tariffs for reasons of national security against countries that have exploited us for years.”
In its application to the US Supreme Court on the case, the US government made it clear what it believes is at stake. Due to the tariffs under the emergency law, important trading partners and the EU have concluded framework agreements with the USA. They would have accepted tariff agreements that were heavily readjusted in favor of the USA. “The stakes in this case could not be higher,” the motion to the court said. If customs authority were denied, it would bring the United States “to the brink of economic catastrophe.”
How does the court justify its decision?
Emergency law states that a president can issue executive orders in the event of a crisis without having to go to Congress. Trump argued that a permanent imbalance in international trade threatened national security and therefore saw the state of emergency as fulfilled. The judges made it clear that the law authorizes the president to regulate foreign trade in national emergencies, but not to impose tariffs. In addition, the USA is not at war with “every country in the world”, which is why Trump cannot rely on war powers.
The decision was made by a clear majority of six to three. This is also notable because six of the nine judges are considered conservative and the Supreme Court has recently ruled in favor of Trump in many cases.
What other options does Trump have to impose tariffs?
As a rule, the US Parliament must approve tariffs, but in practice the President can impose tariffs independently under certain conditions. US Treasury Secretary Scott Bessent has already announced that the government could practically enforce the tariffs using other legal instruments. For example, under a trade law from 1974, Trump could impose tariffs on imports for up to 150 days. For a longer period of time, however, he would need the approval of the US Parliament.
According to US media, Trump could also rely on another section of the 1974 law to launch trade investigations and then impose tariffs in response to any unfair trade practices. At the same time, Trump could seek new tariffs for imports of certain products, similar to his previous approach with steel and aluminum, for example.
What does the ruling mean for importers?
US Treasury Secretary Bessent had already told NBC News at the beginning of September that the government would comply with a Supreme Court order and reimburse importers for customs revenue. According to the government, there was a total of $750 billion to $1 trillion in repayments at the time.
The US Trade Representative Jamieson Greer initially did not know exactly how the reimbursement process would work. If defeated, he would refer the case to the Treasury. In a further step, it must then be clarified together with the court “what a payment plan could look like and what rights those involved and the government have to the money,” he said on Fox Business.
