US President Donald Trump’s new global tariffs came into effect on Tuesday at a rate of 10 per cent, despite his earlier pledge to introduce them at a higher level.
The implementation follows a Friday ruling by the Supreme Court which blocked many of the president’s sweeping import taxes, leading him to initially propose a 10 per cent global rate before suggesting on Saturday that the rate would be 15 per cent.
However, official documents show the tariffs were set at the lower rate on Tuesday, with no directive yet issued to increase them.
A White House official told Reuters that the administration is working to update the rate to 15 per cent to reflect Trump’s announcement, though no timeline for the change was provided.
Economic uncertainty
Analysts have warned that the fast-changing policy is creating significant instability. Carsten Brzeski, an analyst with investment bank ING, told the BBC’s Today programme that the situation adds to the “chaos and mess” for businesses. He noted that the risk of a “fully-fledged tariff war” is now higher than last year, as trading partners may choose to retaliate.
The administration is applying the levy under Section 122 of the 1974 Trade Act, which permits the president to impose charges for 150 days without congressional approval. An executive order signed by Trump on Friday stated the temporary 10 per cent duty is intended to address “fundamental international payments problems” and rebalance trade relationships to benefit American workers, farmers, and manufacturers.
Despite Trump’s argument that tariffs are necessary to reduce the trade deficit, official data shows the US deficit widened by 2.1 per cent last year, hitting roughly $1.2 trillion (£890bn).
Legal battles and refund demands
The Supreme Court ruled on Friday that the president had overstepped his authority by using the 1977 International Emergency Economic Powers Act (IEEPA) to introduce previous tariffs. This decision has opened the door for businesses to seek refunds for the at least $130bn collected under that Act.
FedEx filed a lawsuit on Monday seeking a “full refund” of import taxes paid under the IEEPA. Additionally, the campaign group We Pay The Tariffs, representing over 900 US businesses, has demanded “full, fast, and automatic refunds” in an open letter to the government.
Trump has been highly critical of the court’s decision, calling it “ridiculous” and “extraordinarily anti-American,” and stated the issue would be fought in court for the next five years. Supreme Court Justice Brett Kavanaugh noted in the ruling that the refund process was likely to be a “mess”.
International reaction
Global trading partners are already reacting to the shift in US policy. The European Union has suspended its ratification of a deal struck over the summer. Brando Benifei, chair of the European Parliament’s delegations for relations with the US, called for countries to “work a bit together” and demanded “respect” in trade relations. India has also deferred previously scheduled talks to finalise a recent agreement.
In the UK, Business and Trade Secretary Peter Kyle expressed confidence that the basic 10 per cent tariff deal negotiated between the UK and US would stand. While describing higher tariffs as a “lose, lose” situation, he stated that the UK remains interested in pursuing a full trade agreement.
British business owners have expressed mixed reactions. Daniel Graham, managing director of tea business Birchall, welcomed the lower rate but criticised the lack of clarity. Similarly, Fraser Smeaton, chief executive of Morph Costumes, questioned if the 10 per cent rate would remain stable, noting that his firm is also pursuing a refund for previous “unlawful” IEEPA tariffs.
