Countries subjected to President Donald Trump’s broad use of tariffs would be wise to keep “calm” if he loses at the Supreme Court and is forced to change tack on the cornerstone of his deal-making strategy, a trade analyst said.
“In a sense you should just continue as normal,” Sam Lowe, a partner with Flint Global in London and head of its trade and market access practice, said in an interview Wednesday on Bloomberg TV. “I don’t expect many governments to be openly critical or shouting about it.”
The court’s decision could come as early as 10 a.m. in Washington, though the wait for the opinion may extend until June. Betting markets point to a Trump loss, and Bloomberg Intelligence maintains a 60% chance the court will rule against Trump’s use of the International Emergency Economic Powers Act of 1977.
The main argument for silence is that the Trump administration, if ordered to abandon its current powers, is expected to use other authorities to replicate the existing tariff wall. That transition could leave nations vulnerable to steeper US penalties if they try to use the court case as leverage to redo existing trade deals.
“They’re still going to be worried about their car exports, they’re still going to be worried about their steel exports, they’re still going to be worried about future tariffs on pharmaceuticals,” Lowe said. “They’re not necessarily going to want to provoke the president by suggesting that pre-existing deals need to be renegotiated.”
EU Response
The exception — and one Lowe said he’ll be watching most closely — is the European Union, which has yet to implement some of its tariff-reduction pledges in the agreement reached with Trump in Scotland last July.
Nearly six months since the deal was announced, those measures are working their way through the legislative process.
“I suspect that if the legal basis for the Trump tariffs is struck down, that we’re going to see quite a lot of European parliamentarians and politicians being quite vocal and hostile to the idea of following through on its own commitments,” Lowe said.
The same won’t likely be true for the UK, Japan and South Korea, he added.
Lowe had similar lay-low advice for companies, hundreds of which have sued the US government in hopes of getting refunds if the court rules against Trump. There might be political pressure from the president targeting executives who are seeking to get the money back in a rebate process that’s likely to be complicated and lengthy.
“I think what we’re going to see is an incredible amount of uncertainty if these tariffs are struck down,” Lowe said. “We’re not going to be sure of the different legal instruments, we’re not going to be sure of the tariff levels, and we’re also going to see some products slip through the gaps over time, which could create some new opportunities.”
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