Trump insists trade deals will hold after Supreme Court ruling, but partners aren’t so sure

President Donald Trump defended his tariff agenda during his State of the Union address Tuesday, even as a Supreme Court ruling striking down his emergency tariffs cast fresh confusion over the raft of trade deals negotiated with global partners.

The court ruled Friday that the president had exceeded his authority by imposing tariffs on goods from nearly every country in the world under the International Emergency Economic Powers Act (IEEPA). Trump has said he planned to do so again within the bounds of the law.

Almost immediately after, Trump replaced it with a 10% tariff under Section 122 of the Trade Act of 1974 that took effect on Tuesday. He had also threatened to increase it to 15% tariffs under Section 122, but it is unclear when they would take effect.  

The ruling has raised questions about bilateral trade agreements structured around IEEPA tariff rates, prompting foreign governments to reassess their positions.

″[Trading partners] made concessions in exchange for specific tariff treatment that was grounded in IEEPA. That legal basis no longer exists,” said Johannes Fritz, CEO of the St.Gallen Endowment for Prosperity through Trade.

“Whether the administration can reconstruct those deals under Section 301 or other authorities, remains to be seen, but that will take time and new legal processes,” Fritz added.

Section 301 of the Trade Act of 1974 requires the U.S. Trade Representative to conduct a formal trade investigation into unfair trade practices before imposing tariffs.

“Those countries that were early in striking deals with the United States after the Liberation Day tariffs of last year have been sort of left holding the bag,” Sarang Shidore, director of the Global South Program at the Quincy Institute, told CNBC “Inside India” on Monday. 

“Whereas those other countries that resisted, like Brazil and others, in agreeing to any demands from the United States may be feeling a little more vindicated,” he added.  

Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, said countries that did not negotiate tariff reductions may now benefit more.

She cited Japan, which last year secured a deal lowering reciprocal tariffs to 15% in exchange for a $550 billion investment pledge. 

After the court ruling upended Trump’s tariff agenda, “they (Japan) are now paying to receive the same treatment as others,” Herrero said. 

Japan’s trade minister Ryosei Akazawa said Tuesday that the 10% universal tariffs could impose “additional tariff burdens on some goods,” urging Washington not to treat Japan less favorably than under last year’s trade deal.

During his State of the Union address, Trump claimed that “almost all countries and corporations want to keep the deal that they already made … before the Supreme Court’s unfortunate involvement.”

However, the reality is looking a little different. 

India paused plans to finalize an interim trade deal just days before a trip to Washington, D.C. As recently as Tuesday, Indian minister Piyush Goyal said his country would resume talks as soon as there is more clarity.

On Monday, the European Parliament postponed a vote for a second time on the trade deal that would set a 15% U.S. tariff rate on most EU goods while eliminating European tariffs on many American imports, including industrial goods. 

Bernd Lange, who chairs the European Parliament’s international trade committee, told CNBC on Tuesday that the U.S. had breached the terms of its deal and the bloc was prepared to retaliate if necessary. European officials have expressed concern about the latest levy, suggesting it could threaten the trade deal signed last summer.

EU lawmakers are expected to reconvene on March 4 to assess if Washington has clarified its position and commitment to last year’s deal. 

French President Emmanuel Macron praised the court ruling, saying that “It is good to have power and counterweights to power in democracies.” 

Canada also welcomed the ruling, with regional leaders in British Columbia and Ontario calling it a positive step. The Premier of Ontario, Canada’s most populous province, Doug Ford, said on Monday that “the walls are closing in” on Trump and that no deal is better than a bad deal.

Trump has warned countries against backing away from previously agreements, saying any country that wants to “play games” would face much higher duties under different trade laws. 

In a Truth Social post Monday, Trump said he may also impose license fees on trading partners. U.S. Trade Representative Jamieson Greer also said the Trump administration expects to open new Section 301 investigations into several countries, a legal step that could pave the way for new tariffs. 

Most foreign leaders appeared to be in a cautious wait-and-see mode, reassessing their positions and timing for renegotiating some of the terms of their agreements, given the more limited tariff threats Trump can credibly make now.

Mexican President Claudia Sheinbaum said her government would carefully review the court’s decision to assess its scope and impact.

A Chinese Ministry of Commerce spokesperson said Tuesday it will engage in an “honest negotiation” in the next round of bilateral talks during Trump’s planned visit at the end of next month. 

Beijing said it would “comprehensively assess” any development from Washington and decide whether to adjust its countermeasures against the reciprocal and fentanyl-related tariffs imposed by the U.S. 

While foreign governments weigh their responses, attention is turning to the options remaining for the White House.

With tariffs under the IEEPA struck down, the administration is exploring alternative legal pathways to preserve its trade agenda.

But assembling an alternative plan will take time, meaning the tariff-fueled confusion weighing on the global economy could persist.

To date, the Trump administration has negotiated various agreements, frameworks, and joint understandings concerning trade and tariffs with eighteen countries, according to Jennifer Hillman, senior fellow for trade and international political economy at the Council on Foreign Relations.

“The tariff landscape, and therefore bargaining positions, remain in flux,” Hillman said.

The Trump administration has indicated its plans to use Section 301 investigations and Section 232 of the Trade Expansion Act of 1962, which allows tariffs on imports deemed a national security threat, to impose new duties against trading partners.

It is likely that any changes to existing agreements will unfold gradually, Hillman said, noting that none are fully complete or binding and have not received congressional approval.

— CNBC’s Lim Hui Jie contributed to this report.