Global trade faces renewed uncertainty after u.s. court blocks “reciprocal” tariffs
Global trade policy uncertainty intensified Monday after the US Supreme Court struck down President Donald Trump’s “reciprocal” tariffs, raising questions about the durability of trade arrangements negotiated over the past year and increasing the risk of renewed friction between the US and key partners.
European officials were reported to be preparing to freeze the ratification process of the European Union’s agreement with Washington, while Indian trade officials postponed a planned trip to the US aimed at finalizing an interim accord. The uncertainty weighed on sentiment in early trading, with the dollar and US equity futures slipping in Asia, though market moves were described as modest compared with volatility seen during the initial tariff rollout last April.
The Trump administration said it would replace the previous tariff structure with a temporary, across-the-board 15% levy on US imports, citing Section 122 of the 1974 Trade Act, which permits tariff action for up to 150 days under specified conditions. US officials said the court defeat would not unravel existing agreements and called on partners to honor prior commitments.
Economists at Goldman Sachs estimated the combined effect of the ruling and the newly announced Section 122 tariff would reduce the increase in the effective US tariff rate since the start of 2025 from just over 10 percentage points to about 9 percentage points, implying limited near-term relief for US companies and consumers paying the levies.
Officials across Asia signaled a wait-and-see stance. Singapore’s deputy prime minister said the country would seek clarity on whether the new 15% tariff would apply. Australia’s trade minister reiterated opposition to the measures and said Canberra was assessing options. South Korea and Japan also indicated they were reviewing developments, while Taiwan’s political opposition urged reassessment of major pledges tied to the US relationship.
Some economists noted that a simplified universal tariff structure could, in practice, lead to higher realized tariff collections if reduced complexity limits rerouting, ambiguity, or evasion. Morgan Stanley economists said Asia’s weighted average tariff rate would fall under the new structure, including a reduction in average levies on Chinese goods, though they cautioned relief could prove temporary if the administration moves to rebuild tariffs through sector-specific or country-specific measures using other legal authorities.
