The Supreme Court just delivered what looked like a win for trade sanity. In a 6-3 decision on Friday, they struck down President Trump’s tariffs, ruling that he didn’t have the legal authority to impose them under the International Emergency Economic Powers Act. But here’s the thing nobody’s celebrating: the trade war is somehow getting worse, not better.
Within days of the ruling, Trump doubled down. New tariffs up to 15% are now hitting an array of trading partners effective immediately. It’s like watching someone lose an argument and then just raise their voice louder.
When Legal Defeats Don’t Actually Stop Anything
The Supreme Court’s ruling should have been definitive. The legal path was blocked. Case closed, right? Wrong. The Trump administration is simply pivoting to different sections of the Tariff Act of 1974, particularly sections 232 and 301, to keep the tariff machinery running. It’s like they were always prepared with a backup plan.
Section 122, which Trump is now leaning on for the new tariffs, has its own quirk. Those 15% duties only last until mid-July before needing congressional approval. But that’s plenty of time to cause real damage to business planning and international relationships.
The EU isn’t hiding its displeasure. European leaders expressed dismay over the new tariffs, arguing that this policy shift upends trade deals already negotiated with the U.S. and the U.K. last year. They’ve postponed a key vote on their deal with the U.S. again. That’s not a minor bureaucratic shuffle. That’s a sign that trust in American trade commitments is cracking.
The Real Cost is Economic Uncertainty
Here’s what keeps economists up at night: businesses hate uncertainty more than they hate taxes. When companies don’t know what tariff rates will be next month or next quarter, they freeze. They invest less. They hire less. They don’t expand.
Mark Zandi, chief economist at Moody’s Analytics, was blunt about it. “Businesses don’t know what’s going to happen next,” he told CNBC. “They’re going to invest less, they’re going to hire less, they’re going to be less aggressive in their expansions.” That directly limits U.S. growth.
But it’s not just American businesses pulling back. Foreign governments are too. The perception problem is real and damaging. As Zandi put it, countries are increasingly viewing the U.S. as “a poorly managed economy.” And he didn’t mince words: “It’s a bit of a mess that feels like it’s getting messier.”
When foreign governments lose confidence in American trade policy, they don’t just complain. They redirect their trade elsewhere. China is already reaping the benefits. Their exports grew 6.6% in U.S. dollar terms last December compared to a year earlier, topping analyst expectations and sending their annual trade surplus to a record high.
Not Everyone is Panicking
To be fair, not every economist is sounding the alarm. Citigroup economist Veronica Clark suggested the new tariffs might have less immediate impact than feared. She noted that the 15% Section 122 tariffs should keep the effective tariff rate “essentially unchanged,” potentially even lower by around one percentage point.
Clark also pointed out that details on future Section 301 and 232 tariffs remain uncertain. So maybe some of this anxiety is premature. Maybe the economy will absorb this better than predicted.
But uncertainty itself is a cost. Even if the direct economic impact is muted, the psychological effect on business decisions could still be significant.
The Bigger Picture
What’s actually happening here is a fundamental shift in how trade works globally. The largest economy in the world is becoming unpredictable. That has ripple effects far beyond tariff rates and import volumes.
Mike Reid, head of U.S. economics at Royal Bank of Canada, framed it clearly: “It shifts how trade is done with the largest economy in the world, and that has economic consequences.”
The trade war drama reveals something uncomfortable about the current moment. Deglobalization is now an actual force reshaping the economy, not just a political slogan. Countries are pulling away from the U.S. as the U.S. pulls away from them. That’s not temporary friction. That’s structural change.
Foreign businesses and governments are making long-term decisions based on what they’re seeing. If America is an unpredictable trade partner, they’ll build supply chains elsewhere. They’ll negotiate deals with other countries. They’ll diversify away from U.S. dependence. Once that shift happens, it doesn’t reverse quickly.
The Supreme Court won this battle, but the war it was supposed to resolve is actually intensifying. The question now isn’t whether tariffs are legal. It’s whether the constant friction and uncertainty will gradually push the world’s largest economy into a smaller, slower, more isolated role. And that’s a much bigger problem than any court ruling can fix.
