Columbia Threadneedle Investments: Market Perspectives: Tariffs 2.0? The options for President Trump

Key Takeaways

• Last Friday saw the US Supreme Court rule that the current tariff regime under the International Emergency Economic Powers Act (IEEPA) is unlawful.
• With lower courts set to decide the approach around refunds of tariffs already paid, there will likely be an extended period of uncertainty.
• In response to the ruling the US government announced the imposition of 15% tariffs for 150 days through Section 122 of the 1974 Trade Act. Other routes for implementing tariffs exist but require lengthy investigations.
• The ruling will likely see the overall effective tariff level drop slightly to 14% from 15%-16%. Companies and markets have become accustomed to these levels.
• Any refunds could be slightly beneficial for US earnings and the economy, but the government will receive marginally lower tax revenues. Despite uncertainty, tariffs look set to remain a feature from here.