Long-term US trade regime in flux after Supreme Court ruling: Fitch

THE US Supreme Court ruling on 20 February invalidating the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to levy broad-based tariffs on imports from most countries slashes the US effective tariff rate (ETR) by more than half, from 13% to around 5-6%, says Fitch Ratings.

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However, the administration quickly responded by announcing a 10% global tariff, subsequently raised to 15%, as a replacement under Section 122 of the Trade Act of 1974.

The Supreme Court’s decision highlights the checks and balances in the US institutional frame work, but trade regime uncertainty remains high as the administration continues its commitment to high tariff barriers and seeks durable alternative means to implement them.

The ruling stated that the President does not have the power to unilaterally impose tariffs through IEEPA. This ruling removes the basis for more than an estimated $ 240 billion (4.5%) in annual Federal Government revenues based on the October-November IEEPA run rate, equivalent to 0.8% of GDP.