Supreme Court limits tariffs, but Trump threatens 100% tariffs on Europe
A year ago, when President Donald Trump threatened to impose sky-high tariffs on virtually everything from anywhere, global markets shook and foreign leaders panicked. Now, the same threat is barely noticed.
This is largely due to a Supreme Court ruling in February that deprived the president of his most potent tariff weapon and left him with much more limited options for carrying out his threats. But the verdict didn't stop Trump from trying anyway.
On Friday (26), Trump posted on Truth Social that any European country that implemented a digital services tax would be "immediately targeted with a 100% tariff on any and all products shipped to the United States," adding that the charge would "replace trade agreements" already in place.
"Digital services" encompass a wide range of businesses, from Google ads to Spotify streams. Digital services taxes are structured so that governments can collect revenue from large companies that operate online - even if the business is not profitable.
As many of the biggest technology companies are American, Trump has previously argued that taxes on digital services penalize them disproportionately. The Congressional Research Service, which is officially nonpartisan, agreed with that assessment in certain cases.
Months ago, when Trump carried out such threats, he invoked the International Emergency Economic Powers Act, a 1974 law that the administration said gave him the authority to quickly impose tariffs. No previous president had used the law in this way, and the Supreme Court ultimately ruled that such a measure exceeded his presidential authority.
"When Congress grants the power to impose tariffs, it does so clearly and with careful restrictions," Chief Justice John Roberts wrote in his majority opinion. "In this case, you did neither."
"None of the powers Congress has given the president to impose tariffs allows him to do so whenever he wants," said Jeffrey Schwab, senior legal counsel and director of litigation at the Liberty Justice Center, who led the Supreme Court tariff case.
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"Unless and until these procedures are followed and the conditions are met, the president cannot impose tariffs," Schwab told CNN on Friday.
After the February decision, the government resorted to a more complex plan B: a uniform 10% tariff that is set to expire next month. The president has also launched a series of investigations using a trade law known as Section 301, which could eventually lead to higher tariffs - but could take months to complete.
During his first term, he initiated several Section 301 investigations into European countries' digital services taxes. But in the end, they didn't result in higher fares. Instead, the investigations were essentially used as a bargaining chip in negotiations.
There is certainly a possibility that Trump will resort to these investigations again to speed up the process this time. But 100% instant tariffs seem like a pipe dream given the constraints of trade law.
Source: CNN