Strike-down of Trump’s tariffs offers no long-term clarity for anyone

For a country that has long trumpeted its role as the leader of the free world, the United States’s arcane governance arrangements illustrate a mixture of contradictions that are irreconcilable, even contradictory.

As a self-proclaimed champion of the democratic, free world, you would expect the US to have a particular level of respect for institutions aimed at supporting democracy and its principles.

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While there is no universally perfect model of governance, countries committed to the ideals of democracy tend to create requisite checks and balances that prevent the centralisation of power and avoid creating space for autocratic tendencies to thrive.

The separation of powers is a common element of this model, allowing the executive, judiciary and legislature to set barriers that work collectively towards making the democratic order work in spite of its imperfections.

In the US, however, the polarised nature of the political system amplifies the imperfections.

The ability of the executive branch to determine who serves in the judicial branch has resulted in a system where justices are nominated along party lines and expected to reflect the political bias of the party they are associated with in their decision-making.

The politicisation of appointments

The binary prism from which the judges are perceived creates an expectation that judgments that are delivered by Supreme Court justices are simply an alchemy of each judge’s philosophical position on the constitution, and what the founding fathers had in mind when they drafted it, the precedents set in between, and the prevailing political atmosphere of the day.

When issues involve the question of what politicians are allowed to do, the positions of the justices are materially influenced by the party that nominated them to the Supreme Court.

The question of succession in the Supreme Court therefore represents an important political issue for the major political parties. The lifelong tenure of the justices means that judges elevated to the court have the ability to influence the system for generations.

When an opportunity to fill a vacancy emerges, the political party in charge gets to install its own judge and hopes the individual remains aligned with the party’s orientation.

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When Barack Obama was in office, long-serving Justice Ruth Bader Ginsburg was in her twilight years and if the Democratic Party had prevailed in persuading her to retire while they still had the opportunity to usher in their preferred nominee, they would have been able to ensure she was succeeded by a liberal judge.

As it turned out, she opted to stay on, and when she passed away in September 2020 after 27 years of service, it coincided with an upcoming election – and the Republican Party and Donald Trump managed to install Amy Coney Barrett just before they lost the November election.

In contrast, when Obama’s term was nearing an end in 2016, he nominated Merrick Garland to succeed the late Antonin Scalia but could not finalise the confirmation as the Republicans simply refused to hold the confirmation hearing, claiming the pending election as the reason they could not schedule the hearing and confirmation process.

As soon as Trump was elected, he nominated Neil Gorsuch to succeed Scalia, and Gorsuch was duly confirmed.

Trump’s tariff policy

These events set the backdrop for last week’s decision by the Supreme Court that answered the question of how much latitude Trump has to implement tariffs on US trade partners.

For as long as anyone can remember, Trump has laboured under the view that America is short-changed in international trade and any trade imbalances – as measured by trade deficits – represents the quantum of the exploitation of America.

His instrument of correction – tariffs (his favourite word), and his quest to use them to address the shortcomings of the current trade patterns is resolute.

In April 2025, he unleashed Liberation Day tariffs, which simply calculated the trade deficit between the US and everyone else and converted it into a mathematically flawed reciprocal tariff.

The primary flaw of the model stemmed from the fact that countries that sell more to the US than they can afford to buy – the “trade deficit” group – were deemed as cheats and reciprocal tariffs were slapped on them.

Bizarrely, countries with which the US has a trade surplus – in other words, the US was in essence cheating them – were not spared and when the model indicated that they were not cheating, Trump simply implemented a baseline tariff of 10% anyway.

The deeper problem with the model was that it lacked context, and countries characterised by small population sizes and low income levels, which quite simply could not afford to buy US-manufactured goods, ended up with the highest reciprocal tariffs.

Listen: The Trump effect: How tariffs will impact global economic growth

Quite exactly how these poor countries that sell goods to the 300-million-strong, high-income US market were expected to equalise trade flows remained unexplained.

As one would expect, the tariffs affected US importers and US consumers.

Some of the affected companies initiated legal challenges questioning the ability of the president to unilaterally impose such wide-ranging tariffs. While the case was navigating through the judicial corridors, tariffs were charged and collected.

The Supreme Court’s decision to expedite the case allowed the decision to be made faster than it otherwise would have.

The ruling

Last week’s decision reflected a split of 6-3 among the nine justices. Of the nine, three had been expected to rule against the president because they were appointed by Democratic administrations.

It was the action of three conservative justices who voted in the same way as the three liberal appointees that horrified Trump.

Chief Justice Roberts – appointed after being nominated by then Republican president George W Bush in 2005 – joined Trump appointees Coney Barrett and Gorsuch in striking down the tariffs.

The sense of betrayal that Trump felt resulted in the predicable name-calling that labelled the judges as “fools” and “lapdogs”.

An aggrieved Trump immediately announced that a 10% worldwide tariff would be implemented, only to update that a day later to 15%.

The basis for this is the existence of a rule that allows the US president to implement tariff rates of up to 15% for a maximum period of 150 days if there is a need to address trade imbalances.

Read: European stocks set to tumble on fresh tariff threats from Trump

The problem with the 15% is that it is capped, and the limit means that Trump no longer has the latitude of threatening extortionate tariff rates like the 145% promised to China at the height of the 2025 tariff escalation.

The next headache …

For countries that reacted to the Liberation Day tariffs by putting together deals that dialled back on the rates, the viability of agreements that agreed on a rate higher than 15% – and the question of what to do with those agreements – looms large as the next headache.

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The US’s reputation as an increasingly unreliable negotiator makes the call quite difficult as any agreed rate can still be subjected to narrow-scope tariffs that the US applies on some products.

This makes the job of trade negotiators unpredictable and the effect on the global economy unquantifiable.

Trump’s expression of defiance towards the Supreme Court means he will find alternative ways of implementing tariffs so he can avoid the dismantling of his defining economic policy.

Listen: Trump tariffs: The new sanctions?

This simply means that the recent court ruling must be celebrated with caution rather than jubilation.

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