Trump insists trade deals will hold after Supreme Court ruling, but partners aren’t so sure

President Donald Trump defended his tariff agenda during his State of the Union address on Tuesday, even though a Supreme Court ruling that struck down his emergency tariffs sparked new confusion over the array of trade deals negotiated with global partners.

The court ruled last Friday that the president exceeded his authority by imposing tariffs on goods from nearly every country in the world under the International Emergency Economic Powers Act (IEEPA). Trump said he intends to do so again within the confines of the law.

Almost immediately thereafter, Trump replaced it with a 10% tariff under Section 122 of the Trade Act Trade Act 1974 Which took effect on Tuesday. He also threatened to increase it to 15% of customs duties under Article 122, but it is unclear when it will take effect.

The ruling has raised questions about bilateral trade agreements centered around IEEPA tariff rates, prompting foreign governments to reevaluate their positions.

″[Trading partners] It provided concessions in exchange for specific tariff treatment that was based on IEEPA. “This legal basis no longer exists,” said Johannes Fritz, CEO of the St. Gallen Foundation for Prosperity through Trade.

“It remains to be seen whether the administration is able to rebuild those deals under Section 301 or other authorities, but that will take time and new legal procedures,” Fritz added.

Section 301 of the Trade Act of 1974 requires the US Trade Representative to conduct a formal trade investigation into unfair trade practices before imposing tariffs.

“Those countries that were early on in making deals with the United States after the Liberation Day tariffs last year kind of left the bag,” Sarang Chidur, director of the Global South Program at the Quincy Institute, told CNBC’s “Inside India” on Monday.

He added: “While other countries that have resisted, such as Brazil and others, in agreeing to any demands from the United States may feel a little justified.”

Countries that did not negotiate tariff reductions may now benefit more, said Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis.

She cited Japan, which last year reached an agreement to reduce mutual customs duties to 15% in exchange for a pledge to invest $550 billion.

After the court ruling upended Trump’s tariff agenda, “they (Japan) are now pushing to get the same treatment as everyone else,” Herrero said.

Japanese Minister of Trade Ryusei Akazawa said Tuesday said global tariffs of 10% could impose “additional tariff burdens on some goods,” and urged Washington not to treat Japan less favorably than it did under last year’s trade deal.

India has paused its plans to finalize an interim trade deal just days before a trip to Washington, DC. On Tuesday, Indian Minister Piyush Goyal said that his country would resume talks when… There is more clarity.

The European Parliament on Monday postponed a vote for a second time on a trade deal that would set a 15% US tariff rate on most EU goods while eliminating European tariffs on many US imports, including industrial goods.

The United States has done so, Bernd Lange, who chairs the European Parliament’s International Trade Committee, told CNBC on Tuesday You violated the terms From its deal and the bloc is ready to retaliate if necessary. European officials expressed concern about the latest tariffs, noting that they may threaten the trade agreement signed last summer.

EU lawmakers are expected to meet again on March 4 to assess whether Washington has made its position and commitment to last year’s agreement clear.

Canada also welcomed the ruling, with provincial leaders in British Columbia and Ontario calling it a positive step. Premier of Ontario, Canada’s most populous province, Doug Ford, He said On Monday, he said that “the walls are closing in” on Trump and that not reaching an agreement is better than reaching a bad agreement.

Trump warned countries against reneging on previous agreements, saying that any country that wanted to “play games” would face much higher tariffs under different trade laws.

In a post on Truth Social on Monday, Trump said he may also impose licensing fees on trading partners. US Trade Representative Jamison Greer also said the Trump administration expects to open new Section 301 investigations in several countries, a legal move that could pave the way for new tariffs.

Most foreign leaders appear to be in a cautious wait-and-see mode, as they re-evaluate their positions and the timing of renegotiating some of the terms of their agreements, given the more limited tariff threats that Trump can credibly make now.

Mexican President Claudia Sheinbaum said her government would carefully review the court’s decision to assess its scope and impact.

A Chinese Ministry of Commerce spokesman said on Tuesday that the ministry will participate in “sincere negotiations” in the next round of bilateral talks during Trump’s visit scheduled for the end of next month.

Beijing said it would “thoroughly evaluate” any development by Washington and decide whether to adjust its countermeasures against reciprocal fentanyl-related tariffs imposed by the United States.

But putting together a backup plan will take time, meaning tariff-fueled confusion Its impact on the global economy can continue.

So far, the Trump administration has negotiated numerous trade and tariff-related agreements, frameworks and common understandings with eighteen countries, according to Jennifer Hellman, a senior fellow on trade and international political economy at the Council on Foreign Relations.

“The tariff landscape, and therefore negotiating positions, remains in flux,” Hellman said.

The Trump administration has signaled its plans to use investigations of Section 301 and Section 232 of the Trade Expansion Act of 1962, which allows tariffs to be imposed on imports deemed a threat to national security, to impose new tariffs against trading partners.

Hillman said any changes to existing agreements would likely be made gradually, noting that none of them are complete or fully binding and have not received congressional approval.

— CNBC’s Lim Hui Jie contributed to this report.