Head-on in the lobby: will the ruling of the US Court of Commerce end the escalation of tariff wars

The most acute period of trade wars has already passed, then the degree of tension will decrease, and mutual tariffs will weaken, experts interviewed by Izvestia believe. The growing split within the United States speaks in favor of this scenario: the Trade Court recognized a number of duties imposed by Donald Trump as illegal and blocked their effect. Currently, only 25 percent tariffs on imports of automobiles, spare parts, steel and aluminum into the United States remain in effect. The markets have already reacted positively to the proceedings — global indices have returned to the levels of the beginning of the year. How the situation around trade wars will develop is in the Izvestia article.

The US court blocked the introduction of Trump's duties

The US Court of International Trade ruled that President Trump exceeded his authority and declared the duties imposed by him illegal. This was reported by The New York Times on May 29.

As a result, the panel of judges blocked the president's decision to impose certain tariffs. According to CNN, the ruling applies to 30 percent fees on imported goods from China, 25 percent on some products from Mexico and Canada, and 10 percent on most items entering the United States.

Photo: TASS/ABACA/Gripas Yuri

According to the justice authorities, the president referred to the federal law on the economic emergency of 1977 for the imposition of tariffs, but it does not specify that fees can be used as a tool available to the executive branch to "protect the United States from economic threats" (this is how the president justified the imposition of tariffs). But Trump resorted to it anyway.

The commercial court ruled that the president's strategy went beyond his authority, which led to a global trade war and huge financial losses, including for the States themselves.

Photo: REUTERS/Yves Herman

At the same time, the court's decision does not apply to duties of 25% on cars, spare parts, steel or aluminum, as they are subject to another law referred to by the president.

The Trump administration has already filed an appeal. According to Kevin Hassett, director of the US National Economic Council, the White House will win the dispute. According to him, there are alternatives to tariffs, but they will not be resorted to yet, since the president and his supporters are confident that they are right.

Will Trump cancel the duties

The court's decision is above the executive branch of any level, Dmitry Novikov, head of the HSE Laboratory of Political Geography and Modern Geopolitics, explained to Izvestia. Although the White House may still try to ignore it in parts or completely, citing constitutional prerogatives. Apparently, this will be a "long butting match" between different branches of government in the United States, which will end with the decision of the Supreme Court, the expert believes.

— Court proceedings are an expected and routine process. It reflects the desire of the establishment to slow down, and in some cases block, Trump's initiatives. The pockets of resistance are partly concentrated in the commercial business sector, the ranks of the US Democratic Party, and the pro—Chinese lobby should not be underestimated, independent expert Andrei Barkhota believes.

Photo: REUTERS/Tingshu Wang

Before that, businessman Elon Musk publicly expressed dissatisfaction with the duties, for example, he repeatedly spoke out against the economic views of White House trade adviser Peter Navarro, who is called the main initiator of protectionism in the US administration.

Customs is given the go-ahead: the US and China have reached a truce in the trade war

The suspension of "hostilities" in the event of the current tariff conflict does not guarantee an early "peace"

In addition to the split in the American elites, we can talk about China's resolute resistance, which motivates us to make faster decisions to resolve trade wars, Andrei Barkhota believes. For example, China has activated the anti-Trump lobby and formed a tactical alliance with the EU.

Photo: REUTERS/Go Nakamura

It is too early to put an end to the issue of trade duties, since the Trump administration does not agree with the court's decision and will challenge it, said Olga Belenkaya, head of the macroeconomic analysis department at Finam. However, it is highly likely that the aggravation is already over. If the tariffs are eventually lifted, then other countries, including China, may also take mirror measures — at least for the time being, while the American ones are not in effect.

— In the next 50-60 days, we can expect significant progress on the formation of a trade agreement between China and the United States. Against the background of the current trade regime, the terms of this agreement will be beneficial to both sides," Andrei Barkhota believes.

Photo: REUTERS/Carlos Barria

The markets have already reacted positively to the decision of the Trade Court — futures on the Dow Jones rose by almost 1.1%, on the S&P 500 — by 1.4%, on the NASDAQ — by 1.6%. The Chinese Shanghai Composite, as well as the European indices — the German DAX and the French CAC — are also trading in the black within 1% on May 29.

Stock exchange quotes also indicate that the main escalation of trade wars is over: global indices have recovered to the levels of the beginning of the year.

The more tariffs are eliminated, the better for the global economy. But since it is unclear whether the decision of the Commercial Court will stand in the Supreme Court and what Trump's next initiatives will be (for example, he may impose more industry tariffs), high uncertainty remains for business, Olga Belenkaya noted. For now, it will continue to have a negative impact on global trade, investment, and economic growth.