President escalates trade war after Supreme Court setback
US president Donald Trump said he was imposing an additional 10% global tariff on Friday, using a different statute for the measure after the Supreme Court ruled most of his current tariffs illegal.
Trump announced the move during a fiery press conference in which he blasted the Supreme Court justices who struck down the tariffs he introduced under the International Emergency Economic Powers Act (IEEPA) last year.
The levy, which Trump said he would impose under Section 122 of the 1974 Trade Act, marks a new escalation in the trade war the president launched last year and casts fresh uncertainty on the global economic outlook.
The Supreme Court’s landmark ruling that most of Trump’s tariffs were illegal (but not levies on Canadian steel, aluminum, lumber and automobiles) was blasted by the president as “disgraceful,” while he dismissed the idea that his new tariffs would prove short-lived.
Under the 1974 Trade Act, the president is permitted to impose tariffs for up to 150 days but would require Congressional approval for an extension after that.
Trump torched that idea. “We have a right to do pretty much what we want to do,” he told reporters.
US Treasuries, which strongly influence 30-year fixed mortgage rates, ticked higher throughout the day but barely wobbled after Trump announced the new tariffs.
Some analysts believe the Supreme Court ruling could set the stage for a quicker pace of Federal Reserve rate cuts this year, although it remains to be seen whether that picture changes if Trump’s new tariff comes into play. Others, meanwhile, aren’t convinced the new tariff will last for long.
But there’s no sign that Trump is prepared to back down on tariffs in the long run, giving the central bank further food for thought as it weighs up its approach to interest rates in the months ahead.
Trump suggested on Friday that he had even stronger tools at his disposal to implement tariffs against trading partners. “We have alternatives,” he said. “Great alternatives.”
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