A rare 'no' for Trump, but not necessarily an end to tariffs

From tearing down the White House's East Wing to capturing foreign leaders, this is not a president who is used to being told "No".

But the Supreme Court's ruling that President Donald Trump cannot legally use emergency powers to invoke reciprocal and country-specific tariffs derails his existing trade strategy.

The league table of tariffs unveiled in the Rose Garden on so-called Liberation Day last April - and more recently President Trump's threat to deploy more on European countries unless they support his plan to buy Greenland - ripped up the world trade order, risking a resounding blow to growth.

But if you think we are heading back to pre-Trump business as usual - think again.

First, this invalidates only some of the additional tariffs President Trump has ordered since taking office last year.

After intense negotiations following Liberation Day, the average tariff rate countries faced on selling into America settled at around 15%.

The Supreme Court decision has in theory more than halved that typical rate. But it remains above 6% - around three times the typical rate at the start of 2025 - because of tariffs imposed under different guises.

However, second, importers may not actually see much change from current tariff levels.

Consider how the tariffs imposed using the 1977 International Emergency Economic Powers Act (IEEPA) landed. Look at the money that was collected last year, and they actually equate to average tariffs of about 11%.

Importers have been agile in switching their supply chains away from the most highly tariffed countries. Sales of items such as clothing and toys from China have suffered consequently. Or importers have absorbed some of the higher costs themselves or along those supply chains – meaning the impact on US inflation has been muted.

That and a desire to keep the money flowing in (tariff revenues soared to $240bn last year, although they appear to have levelled off) has perhaps empowered the Trump fightback.

"We'll figure something out," said the president pre-judgement.

There's several different legal routes Trump can look to use to largely replicate the IEEPA tariffs.

But they are more complex and lengthy legal routes.

Which provides a window of opportunity – for importers to rush in goods but also one of risk. For it is uncertain to what extent Trump could change the tariffs faced by different countries and products.

He's struck a more conciliatory note of late, with an eye on cost of living implications.

Plans for higher tariffs on furniture, for example, have already been postponed, while levies on some imported foodstuffs have been reconsidered.

Further concessions to American households' shopping bills might be made - especially if "tariff dividend cheques" for households become less feasible as revenues dwindle further.

And that window would be fraught with renewed uncertainty for American importers, particularly smaller ones with less agile supply chains and purchasing power – and for exporting businesses around the world.

Drive trade allies closer

And what of US trading partners? As American importers scrambled to switch suppliers last year, Asian producers such as Thailand and Vietnam benefitted at the expense of more highly tariffed China.

But China has still flourished, thanks to a surge in imports of IT hardware into the US amid the AI boom.

Beijing has also intensified its focus on emerging markets in Africa – and been wooed by the likes of Canada.

The Trump trade tremors were a catalyst that intensified efforts for many countries to pivot and strengthen alternate trading relationships.

In fact, global trade likely outpaced world economic growth last year.

It's questionable if that will be replicated this year, amid fresh uncertainty.

But the US repeatedly demonstrating that it's a volatile partner, regardless of the trade terms it settles on, may only drive previously close allies - such as the EU and UK - away and further into each other's arms.

And there's more uncertainty still - over how agreements that were struck for countries such as Japan to invest more in the US in return for avoiding the worst of the IEEPA tariffs will now evolve.

The financial markets, too, will of course have to grapple with yet another bout of uncertainty.

So while the president has had one potent lever removed, the legacy of his actions remains.

The last year has been dominated by a president who thrives on weaponising uncertainty and appearing to get the upper hand in negotiations.

But equally, he's dealing with a world that's become more adept at riding that wave – and making the most of it.