Trump’s Treasured Negotiating Edge Dulled By Tariff Defeat

48hd[[15xy5(7yof7]pg5lzk_media_dl_1.png US Census, Bloomberg Economics

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(Bloomberg) — With the stroke of a pen, the Supreme Court wreaked havoc on President Donald Trump’s favorite method of wielding leverage over other countries. 

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The justices’ landmark ruling Friday striking down the administration’s global tariffs marks a significant blow to a president who relishes exerting unilateral power to achieve his goals — something he did virtually unchecked during his first year in office. Trump quickly announced plans to reimpose the duties, but the other means available to him are far less nimble. 

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“It’s one of the most important moments of the presidency so far,” said Josh Lipsky, who leads international economics work at the Atlantic Council, a Washington think tank. 

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Tariffs imposed under an emergency powers law “have been the primary economic weapon the president has leveraged to remake the global trading system.” The question now, Lipsky said, is “can you rebuild it in aggregate?”

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As the White House regroups, the ruling has immediate implications for Trump’s planned meeting with his counterpart Xi Jinping in China, in which the two were expected to extend a tariff truce reached last year. Beijing will come into the discussion with a strengthened hand, and could make Trump’s expected demands for large purchases of American goods, Boeing Co. aircraft and energy exports a tougher sell. 

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Wilbur Ross, who served as Trump’s Commerce Secretary during his first term, said the president’s alternatives all contain “drawbacks” that “limit” the scope of his powers. 

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“What all of them will do is give him less negotiating power with all these countries, particularly with China,” he said in an interview.

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It also raises the stakes for Tuesday night’s State of the Union address, which the president has already said would tout his economic agenda. Trump may be forced to recalibrate his message now that his signature policy has been thrust into chaos.

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Fearful of having his power clipped, Trump has spent months openly begging the court to keep the levies in place, declaring that the president “has to be able to wheel and deal with tariffs.” He has credited the tariffs — or the threat of them — for pressuring foreign leaders to the negotiating table to rectify trade imbalances and even stop armed conflicts.

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But the court — controlled by a conservative majority, including three justices Trump appointed to the bench — did not bow to his entreaties. 

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The message from the majority opinion was clear: “The Framers gave ‘Congress alone’ the power to impose tariffs during peacetime,” it states. “And the foreign affairs implications of tariffs do not make it any more likely that Congress would relinquish its tariff power through vague language, or without careful limits.”

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The blow comes amid a perilous stretch for the White House, with Trump facing criticism over his threats to acquire Greenland, violent actions by immigration officers and the fallout from the Jeffrey Epstein files.