After the U.S. Supreme Court rejected the全面关税, Trump quickly imposed new taxes! Economists warn: the U.S. economy could become the biggest loser

Bloomberg News has learned that the U.S. Supreme Court last Friday issued a ruling overturning President Trump’s comprehensive tariff policy, but this has not ended the turmoil in trade taxes. Economists say the ripple effects of the ruling could further tighten global trade relations, and the U.S. economy itself may ultimately bear the brunt.

In this 6-3 decision, the Supreme Court found that Trump’s actions in April of last year to impose large-scale tariffs under the International Emergency Economic Powers Act lacked legal authorization.

Following the ruling, Trump immediately imposed tariffs of up to 15% on multiple U.S. trade partners, with immediate effect, further escalating the already tense global trade situation. EU leaders expressed disappointment over the new tariffs, believing that U.S. policy shifts would disrupt trade agreements reached last year with the EU and the UK. On Monday, the EU again postponed a key vote on its agreement with the U.S.

The international community’s resistance to Trump’s latest tariff threats highlights widespread dissatisfaction with his unpredictable trade policies. This may prompt foreign governments to reduce trade with the U.S. and lead to corporate contraction, expansion, investment, and hiring plans.

The ultimate outcome could drag down the U.S. economy. “This changes the way the world trades with the largest economy, and that will have economic consequences,” said Mike Reade, head of U.S. economics at Royal Bank of Canada, referring to the Supreme Court’s ruling and the subsequent new tariff measures.

Negative Effects Highlighted

Moody’s chief economist Mark Zandi believes this trade war drama is likely to create a cautious atmosphere among businesses and foreign governments, and for the U.S. economy, “it will only bring negative impacts.”

“Companies don’t know what will happen next,” Zandi said. “They will reduce investments, cut back on hiring, and be more cautious about expansion.” This will limit U.S. growth. The economist also pointed out that foreign governments might react similarly amid increasing uncertainty, leading them to “continue to distance themselves from the U.S.”

“They are definitely very anxious about this,” Zandi said. “The outside world is increasingly viewing the U.S. as a poorly managed economy, and objectively, they are right. The current situation is somewhat chaotic and seems to be getting worse.”

This perception may lead parties to seek to shift trade away from the U.S. to other trading partners, including China. China Customs data show that in December last year, Chinese exports in USD increased by 6.6% year-over-year, exceeding analyst expectations and setting a record for the annual trade surplus. Imports also grew at the fastest pace in three months during the same period.

Trump’s Trade Tariffs

U.S. Trade Representative Katherine Tai said the Trump administration will continue to pursue its trade policies and plans to invoke multiple provisions of the Trade Act of 1974. To justify the new tariffs implemented this weekend, Trump is citing Section 122 of the Trade Act. However, this section is only valid for 150 days until mid-July, after which extension requires congressional approval.

But the government is likely to also activate Section 232 (national security) and Section 301 (unfair trade practices) of the Trade Act to supplement the Section 122 tariffs. This means the U.S. could continue to impose tariffs on trade partners for the next several years.

Some also believe that investors and economists do not need to sound the alarm for now. Citigroup economist Veronica Clark told clients that the implementation of new tariffs “means that effective tariff rates or our inflation forecasts will see little change in the short term.”

“Going forward, tariffs based on Sections 301/232 may impact the prices of certain goods, but the details remain highly uncertain,” Clark wrote. “While the 10% Section 122 tariffs could reduce effective tariff rates by 3-4 percentage points, the 15% tariffs should keep effective tariff rates roughly unchanged (or possibly reduce by about 1 percentage point).”

Although the overall impact of the new tariffs remains uncertain, Zandi said a few things are clear. “The U.S. is alienating the world, and the world is starting to alienate the U.S.,” said the economist. “De-globalization is a drag on the economy, and ultimately, the outcome will be a weakened U.S. economy.”