When US President Donald Trump threatened tariffs against the US’s Nato allies in a dispute over Greenland in January, London was rattled, the European Union (EU) held emergency meetings and thousands took to the streets in Denmark.
When, just three months later, he announced 50 per cent duties against countries selling arms to Iran, without “exclusions or exemptions”, his comment was quickly brushed aside.
The difference was down to a judicial decision about presidential power.
By ruling against his “liberation day” tariff announcements for overstepping his authority, the US supreme court undermined what in many ways was Trump’s superpower – his preferred means of pressuring other countries into bending to his will.
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“The president has lost something important to him, which is the ability to threaten tariffs on a Friday and impose them on a Monday,” says Michael Smart, managing director at Rock Creek Global Advisors, an advisory firm in Washington.
Another US court compounded the misery for the president last week by slapping down global tariffs of 10 per cent he announced in February to replace the duties thrown out by the supreme court. The government is appealing against the decision.
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Now, as he prepares to meet China’s president Xi Jinping in a long-awaited summit, Trump and his administration are trying to rebuild his power to impose tariffs on imports from around the globe.
The problem for the US president is that resistance is building in Congress, the tariffs are unpopular ahead of already challenging midterm elections and replacement measures may fall far short of providing him with the room for manoeuvre he seeks on the world stage.
Myron Brilliant at the Albright Stonebridge Group, a global strategy firm, says other countries are already treating Washington with less deference after the supreme court ruling.
He argues that, while they are not reneging outright on their trade deals with Trump, such states are “rethinking, recalibrating, revising”.
An Asian trade official concurs that many countries, particularly in southeast Asia, are looking again at the agreements they reached under the threat of the liberation day tariffs. EU diplomats express doubt that, with inflation rising in the US and the midterms looming, Trump has the political leeway to raise tariffs by much again.
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But people familiar with the president’s thinking describe Trump as being more pro-tariff than ever.
“His wings have been clipped,” says Brilliant. “But he’s not reversing course.”
Why Trump loves tariffs
Trump is now relying on his trade representative, Jamieson Greer, to work at speed so that he can reimpose all of his liberation day tariffs as soon as July.
The US president appears undeterred by economic constraints, such as soaring petrol prices and the rise in inflation, which the IMF predicts will reach 3.2 per cent this year, up from the 2.5 per cent it forecast before Trump launched the Iran war.
In fact tariffs – and the ability to impose them almost instantaneously – remain at the centre of Trump’s vision of government. He has, after all, dubbed himself “tariff man” and declared his faith in import duties as long ago as the 1980s.
During his two terms in office, he has tested the limits of what tariffs can accomplish – whether to rebalance the economy and revive American manufacturing, raise tens of billions of dollars in revenues, or bolster the power of the US and its president.
In 2025, the experiment came to a head. Trump wielded what appeared to be an almost unlimited ability to impose eye-watering tariffs on goods from any country.
On liberation day he unveiled import duties ranging from 49 per cent on Cambodia to 20 per cent for the EU – and 10 per cent for the exclusively penguin-inhabited Heard and McDonald Islands. A few days later he announced that tariffs on China would rise to as much as 145 per cent.
But the year was characterised by revisions and retreats. The administration negotiated deals with allies and adversaries and suspended and backtracked on tariffs that had sent stock markets plummeting.
In October, Xi and Trump hammered out a trade war ceasefire, after months in which Beijing matched US tariffs and imposed new controls on rare earths.
Then this February’s supreme court ruling invalidated most of the tariffs the president had so far imposed during his second term.
Trump has still changed the face of US trade policy. The New York Federal Reserve has calculated that last year the average tariff rate rose from 2.6 per cent to 13 per cent, although estimates can vary due to a range of factors, including how much rates take into account exemptions and substitutions. The New York Fed added that around 90 per cent of the cost had been passed on to US businesses and consumers.
Many economists say it is absurd to expect the duties to wipe out the trade deficit or revitalise American industry. They argue that as long as the US runs a huge budget deficit, depressing savings, it will need foreign capital and to import more than it exports.
Greer, Trump’s trade representative, maintains that the policy is working, telling Congress in April that the trade deficit had headed downwards during the 12 months since liberation day and that US manufacturing jobs and wages were both up.
“We’re exporting more than we’ve ever made before, and our workers are making more and getting paid more to do it,” he said. “We know we have success.”
Still, the US goods deficit reached a record high of $1.2 trillion (€1 trillion) for 2025 as a whole, even though trade with China tumbled. Manufacturing remained at around 9 per cent of gross domestic product (GDP), down from 13 per cent roughly two decades ago.
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And while the tariffs have raised around $130 billion for the US government since the latest fiscal year began in October, it is unclear how much will have to be refunded following the supreme court ruling.
Trump has also lost – for now at least – much of the discretion he had over the tariffs that the supreme court disallowed, which were based on the US’s 1977 International Emergency Economic Powers Act.
“Tariffs are his favourite tool and he could impose them for whatever reason he felt like,” says Edward Alden at the Council on Foreign Relations. “He was having a lot of fun with this.”
Now, however, the president’s ability to threaten other countries with instant economic harm is hampered, hitting the personalised use of the tariffs of which he had become so fond.
Congress isn’t happy
The US constitution clearly sets out that Congress controls taxes and duties. But there has been little resistance to Trump’s moves to cut legislators out of his trade decisions – until now.
Several Republican members of the House of Representatives said that misgivings about Trump’s tariffs policy are on the rise. That matters because one route to extend or revive his trade powers runs through Capitol Hill.
Dan Newhouse of Washington state expects the supreme court’s ruling to give Congress “more leverage over the president’s activities”.
“I think that’s a good thing,” he adds. “I’ve never been a huge fan of tariffs being overused.”
Like Newhouse, Jeff Hurd, a Republican congressman from Colorado, voted this year against Trump’s tariffs on Canada.
In a possible sign of the limits of presidential influence, Trump initially attacked Hurd for his vote, but has since endorsed his re-election campaign.
“There are only a handful of us that have publicly taken the position that we’ve taken but I know that there are a number that privately are also reaching out,” Hurd says.
Don Bacon, whose Nebraska district includes the city of Omaha, suggests that a majority among congressional Republicans is at heart against the tariffs.
“Most of the Republicans in the House [of Representatives] oppose tariffs, but they’re having a quandary,” he says.
“In the 2024 election the president ran on it [the tariff policy] and he won. I don’t think he won because of it – but they feel like they got to give them a chance, let him do his marquee economic plan.”
The question is how much scope congressional Republicans will continue to give Trump’s trade policy ahead of midterms that pose such a threat.
In generic congressional polls, Democrats hold a five percentage point advantage.
The timing is not helpful. Even assuming the levies survive legal scrutiny, the replacement 10 per cent tariffs that Trump imposed after his supreme court defeat are set to expire after 150 days, unless Congress votes to extend them.
That could translate into high-profile votes on unpopular tariffs towards the end of July – just as election season is hotting up.
The big issue is the economy, where Trump’s ratings are decidedly poor. In April only 30 per cent of voters approved of his economic management, down from 38 per cent in March, according to polling from AP and the University of California. Fewer than one in four thought he was handling the cost of living crisis well.
And, according to a separate survey by CNN, more than 60 per cent of the public disapproves of tariffs.
Both Bacon and Hurd say their districts have been economically hit by the duties, with the fallout ranging from falling soyabean sales to China to increased costs for bicycle manufacturing. Both say Congress should control tariff policy.
Too many rules for anyone’s comfort
One key restraint on Trump’s tariff policy is the impact on business – and ultimately on the stock market whose rises he celebrates and whose falls he seeks to avoid.
“They’ve always been very open to individual companies going in and saying, ‘I have a big problem here. Can you fix this thing?’” one business figure says of the administration. “They don’t like to call them exemptions, they say: ‘Don’t use the E word’, but still they’ve been open to tweaking things.”
Last month, for example, the administration made a long-awaited announcement on pharmaceutical import duties that featured a headline rate of 100 per cent. But it included so many carveouts for companies and countries that the overwhelming majority of drugs will be taxed at far lower rates.
It also recently reduced tariffs on consumer products hit by steel and aluminium tariffs – such as motorcycles, furniture parts and gym equipment – and has been looking at cutting levies on imported chips from Taiwan.
But the current complexity of the tariff schemes is adding to businesses’ frustration.
They must now use a raft of specialised codes to comply with tariffs and qualify for exemptions – as well as calculating value at different parts of the production process and tracing the origin of parts.
Business is not alone in its exasperation at the Byzantine nature of Trump’s emerging tariff system. The man in the White House is also very much affected.
At present Trump is using a patchwork of obscure laws and bureaucratic processes to wage his trade war.
But those very processes – and the stipulations they set out – mean that he can no longer make trade policy at lightning speed.
In some areas, Trump retains latitude.
Last week he threatened the EU with “much higher” tariffs if it failed to put its post-liberation-day deal with the US in place by July 4th.
The US president can still impose higher duties on products such as cars and semiconductors, where tariffs are issued under a different legal authority from the one struck down by the supreme court. Such areas are governed by section 232 of the Trade Expansion Act of 1962, which allows the president to hit specific sectors with levies for national security reasons.
Alden of the CFR says the measure provides “open-ended grants of tariff authority” for “a bunch of significant sectors”.
Elsewhere, however, the process is much more laborious, cumbersome and bureaucratic than the free-flowing, Truth Social-ready tariff policy Trump has used to exercise power during much of his second term in office.
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As the 150-day clock on the 10 per cent tariffs runs out, the president expects Greer to complete several new investigations into trading partners, in areas including forced labour rules and government subsidies to pave the way for fresh tariffs.
But such processes require much more paperwork than the emergency measures Trump has so far relied on. Businesses must be consulted and hearings must be held. They take months to complete.
Peter Harrell, a visiting scholar at Georgetown University who previously worked in Joe Biden’s White House, says the administration is beginning to realise it “is going to have to be more disciplined and careful”.
“[Trump] is going to find he can maintain, if he does his homework ... somewhere between 5, 10, 15 percentage point tariffs on many of America’s trading partners,” Harrell adds.
“What he’s going to find he can’t do is change the rates on short notice. And I think he’s going to find the kind of 35, 40, 50 per cent rates he likes to threaten ... He’s not going to be able to do rates like that.” – Copyright The Financial Times Limited 2026
