The US Supreme Court has ruled Donald Trump's tariff unlawful, thereby annulling the Reciprocal Tariffs he placed on numerous countries under IEEPA after his second presidential tenure starting April 2025. In response, Trump utilized another clause, promptly igniting a 10%, followed by a 15%, Global Tariff Bomb.
Moody's, a global agency, recently issued a report on the impact, highlighting new uncertainties in America's trade strategy with potential alterations in agreements with India and Indonesia. Specifically, the India-Indonesia deal has left stakeholders uncertain about the tariffs' effect.
Supreme Court Decision Leads to Uncertainty
Moody's Analytics released a report on Tuesday, stating that Trump's proposed 15% uniform tariff could potentially bring relief to many Asia-Pacific economies previously burdened by high tariffs, including China and most parts of Southeast Asia. Nevertheless, the recent US Supreme Court decision has introduced fresh uncertainties in Washington's trade strategy, affecting its evolving trade agreements with India and Indonesia.
Trump Likely to Increase Tariffs!
According to Moody's, the 15% tariff might favor China's and Southeast Asia's economies, while its impact on countries like Japan, South Korea, and Taiwan appears limited, as they are already subjected to a baseline tariff of about 15%. The agency expects Donald Trump to explore other legal avenues to raise tariffs further.
Source: aajtak
The report suggests it wouldn't be surprising if US tariffs return to levels seen before last Friday's Supreme Court decision. In its outlook, Moody's warns of potential trade flow disruptions, persistent operational hurdles, and companies possibly seeking refunds on previously paid tariffs.
Impact on the India-US Deal
Moody’s indicates the Supreme Court's judgment complicates various US trade negotiations, especially highlighting potential changes in the recent trade deal with India and Indonesia. Crucial issues, like the timeline for halting Russian oil purchases, remain unresolved under the India deal.
In light of this uncertainty, an immediate diplomatic impact saw the rescheduling of a meeting intended for Indian negotiators to finalize the legal draft of the India-US Trade Deal. Originally a three-day event in the US, the meet was postponed following the SC ruling as policymakers now strive to balance geopolitical considerations, energy imports, and market access amid evolving US tariff regimes.
Source: aajtak
Moody's describes the rescheduling of the three-day meeting not as a retreat but a strategic recalibration. India seeks clarity on whether the 15% tariff represents an added cost or a temporary substitute and whether the US Congress will approve, amend, or allow it to lapse after 150 days.
America's Influence Diminished
Moody’s asserts that the Supreme Court's decision on Trump's tariffs has limited America's ability to impose specific country tariffs since it can no longer use them as leverage in negotiations. This limitation might weaken the US's bilateral trade negotiation power, including impending talks between Donald Trump and Chinese President Xi Jinping. The report suggests some governments might delay trade agreements with the US out of fear of more punitive tariffs, though they are unlikely to cancel them entirely.
