Most international leaders already regard Trump as a fool. Many of them will heave a sigh of relief that the tariffs are blocked. But they also know that Trump hates being thwarted.
They will thus be concerned about what this most mercurial of presidents will do if his tariffs are blocked by the Supreme Court.
By Tom Arms | London
Trump is right. Ending tariffs would be an economic disaster, at least for him. Any damage to America would be his own fault.
It would not, as Trump claims, turn America into a third world country. That is a typical Trumpian hyperbole.
But the sudden and dramatic end of tariffs would definitely damage Trump’s vision of the future American economy. And that in turn will hurt Trump politically. Whether it would also be bad for the rest of the world… well, we’ll have to wait and see.
The prospect of the sudden end of tariffs was raised by the decision of the Appellate Court last Friday to support a lower court’s judgement that the tariffs were unconstitutional.
The Appellate Court, however, has given Trump a possible out—The Supreme Court. The Administration has until October 18 to appeal to the ultimate judicial authority and, of course, the court is packed with conservatives,
But that may not be enough. Trump imposed the tariffs under the 1977 International Emergency Economic Powers Act (IEEPA). The IEEPA gives the president sweeping powers to declare an emergency and to use economic actions to deal with it.
These include such measures as sanctions and freezing assets. However, nowhere in the Act does – ruled the Appellate Court by 7 to 4—is the president given the power to impose tariffs. That is “a core Congressional power. “This means, according to two levels of the judiciary, that the tariffs are unconstitutional and should be reversed.
So far Trump’s tariffs have raised more than $210 billion dollars. By time the Supreme Court rules on their legality the figure will be around $300 billion.
If the tariffs are illegal than those who paid them can sue the government—plus interest and possible damage to business—for the money that they lost.
But that is not all. Tariffs are at the heart of Trump’s long-term economic policy and linked to his Big Beautiful Bill (BBB). According to some estimates, the sweeping tax cuts in the BBB could increase the federal deficit by $5.2 trillion over the next ten years. Tariff revenues are meant to more than offset those losses.
In fact, according to Trump, his plan is to eliminate income tax completely and replace it with revenues from tariffs.
Now, here is the rub. The BBB is completely and totally ironclad legal because it was passed by Congress as stipulated in the constitution. Unlike the tariffs, it cannot be reversed. The tax cuts which are at the heart of the BBB are permanent.
This means that Trump has constructed a perpetual economic edifice on foundations which may be declared illegal. If tariffs are declared unconstitutional, the only way he will be able to pay the $800 billion a year allocated immigration control and the $150 billion extra a year for defense is by borrowing money. Republicans—and many Democrats—think the federal deficit is already too high at $1.9 trillion.
There is, of course, the possibility that Congress would vote to give the president the power to impose tariffs. This is unlikely even with a Republican-controlled House of Representatives because the lower house of Congress jealously guards its control of the nation’s finances.
Losing the tariffs war would have other effects. In addition to paying tariffs, many countries have agreed to invest trillions of dollars in US industries and many American companies have promised to return factories to US soil. Japan and the EU have between them agreed to invest $1.1 trillion in the US. Scores of companies have concluded that it is financially—and politically–advantageous to move production to America.
With the end of tariffs Trump is less of a political threat and it is cheaper to keep production outside high labor-cost America. In short, investment promises are tied to tariffs.
Politically, of course, the end of tariffs would make Trump look foolish. But then, that is exactly what he is. Donald Trump has built an economic policy predicated on powers which it very much looks as if he may not have. He has also failed to think through the consequences of an action—one the first principles of leadership.
But what impact will this have on Trump politically. As far as his base is concerned—not much. MAGA has no alternative to Trump. It will hurt him with swing voters, especially those in the low-income Hispanic and Black communities who are already being hit by his economic policies. This could mean a boost for the Democrats in the mid-terms which would curtail Trump’s power in the second half of his administration.
As for the rest of the world, most international leaders already regard Trump as a fool. Many of them will heave a sigh of relief that the tariffs are blocked. But they also know that Trump hates being thwarted. They will thus be concerned about what this most mercurial of presidents will do if his tariffs are blocked by the Supreme Court.
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Tom Arms is foreign editor of Liberal Democrat Voice. He is also a regular contributor to “The New World,” lectures on world affairs and is the author of “The Encyclopedia of the Cold War” and “America Made in Britain.”
