The US Supreme Court decision to strike down Donald Trump’s tariffs may have a smaller impact than expected, since analysts assure that the White House will be able to maintain its trade policyand at ING they are categorical in pointing out that «tariffs are here to stay.» For now, the president has already announced a new global tariff of 10%, which will be implemented under what is known as Section 122, which allows trade measures to alleviate balance of payments problems. Specifically, the Supreme Court concluded that the International Emergency Economic Powers Act (IEEPA) does not authorize broad tariffs based on persistent trade deficits, and that US President Donald Trump overstepped his bounds by enacting these tariffs without clear authorization from Congress. However, at ING they assure that «the White House has been preparing for such a ruling»so they have finalized alternative tariff figures for months. For example, they explain that «Trump started a Section 301 investigation against Brazil in December precisely to have replacement options ready, and several sectoral tariffs have been implemented or at least contemplated. «In summary, the US Government’s tools include tariffs under the Section 301 (unfair trade practices), Section 232 (national security), Section 122 (balance of payments problems) and Section 338 (discrimination against US exports)», they detail. Of these optionsSection 122 offers the fastest path, allowing tariffs of up to 15% for balance of payments reasons with minimal procedural requirements, which means that implementation can be «almost instantaneous.» «The limitations: a period of 150 days unless extended by Congress, and a limit well below current reciprocal rates. Section 122 has never been invoked, but its balance of payments trigger mechanism clearly applies to important partners like China and Mexico. Consider it a temporary solution while more durable options are developed,» they add. For long-term tariffs, they believe that «Section 301 investigations remain primary tool«, since «they allow the imposition of tariffs in response to unfair trade practices, but require up to nine months of review before implementation.» «The Brazil investigation is already underway. More will follow. Section 232 national security reviews offer similar flexibility with similarly long timelines; Current investigations cover steel, aluminum, copper, automobiles and auto parts,» they anticipate. Taking into account this range of possibilities, they do not hesitate to point out that «regardless of the interpretation of the ruling, tariffs are here to stay«. They also point out that «the scaffolding has collapsed, but the building is still under construction», and that «Trump’s tariff agenda survives with new legal bases and a complicated transition period.»Europe must not be mistaken: this ruling will not bring relief. Instead, Sections 301 and 232 investigations can focus on specific sectors more precisely than the IEEPA’s general approach. Pharmaceuticals, chemicals, automotive components: all plausible candidates for the next round. The legal authority may be different, but the economic impact could be identical or even worse,» they warn.
THE MARKET REACTION
Although it may have a limited impact, the Supreme Court’s decision has the potential to move major markets in the short term. At ING they indicate that, In Treasury bonds, this measure «translates into a higher yield.»
«He The greatest direct impact is observed in the fiscal deficit and, by extension, in the supply of bonds. To be sure, tariff revenues have served as something of a protective blanket for concerns about the deficit. The deficit is still too high. However, the real results have been lower than the comparisons of the same period with 2024, and the tariff revenues have made the difference,» they comment. Beyond the immediate impact, they assure that The next big question is to what extent this affects the inflation outlook.something crucial for bonds. «If tariffs are simply reintroduced under another guise (our core perspective), the inflationary threat remains high and could even intensify as the new tariffs take hold. On the other hand, many of the other means of establishing replacement tariffs are temporary and possibly less impactful,» they say. In equities, they emphasize that «stocks seem to agree with the news that corporate profits could be affected by tariffs», although show doubts about «how long this will last». «In theory, this should keep alive the global interest in rotation to non-US markets. Data published by the ECB shows that foreigners bought the largest amount of eurozone stocks last December since the end of 2021. As long as energy prices do not skyrocket due to events in Iran, it seems that this rotation could last for a while,» they anticipate. For their part, TD Securities analysts state that «an increasingly positive tariff environment could be a favorable factor for small and medium-sized enterprises, which have suffered a greater burden.» «Prices of basic goods may not rise as much as expected; however, We do not foresee a complete reversal of the price increases already implemented«, they conclude.
