The U.S. Supreme Court ruled in February that most of the tariffs imposed by President Trump in his second term exceeded his legal authority.
In response, the Trump administration immediately introduced a 10% temporary tariff applied to nearly all U.S. imports.
However, this measure can be maintained for a maximum of 150 days legally, and the application deadline expires this Friday.
During this time, the administration maintained temporary tariffs while preparing a new tariff system, and businesses that had been dealing with frequent policy changes were able to continue operations in a relatively stable environment.
▲ End of 5-month period of stability
This stable phase is now expected to end.
Jamieson Greer, the U.S. Trade Representative (USTR), said in a CNBC interview on the 22nd (local time) that new tariff measures to replace temporary tariffs will be announced soon.
A day earlier, President Trump also announced he would impose an additional 50% tariff on some Canadian products.
This is a measure to pressure the renegotiation of the U.S.-Mexico-Canada Agreement (USMCA), and is being pursued separately from global tariff policies being restructured following the Supreme Court ruling.
▲ "Businesses had forgotten about tariff risks"
Drew Dlong, a former U.S. State Department official now working at consulting firm Kearney, assessed that "a new phase will begin in just four days."
He analyzed that "many businesses have let their guard down over the past five months, thinking that tariff issues have settled down."
▲ Legal basis also changing from emergency law to trade law
The Supreme Court ruled that President Trump's use of the National Emergencies Act enacted in the 1970s to impose broad-based tariffs exceeded his authority.
Accordingly, the Trump administration is expected to impose new tariffs based on Section 301 of the 1974 Trade Act going forward.
Section 301 is evaluated as having greater legal stability than the existing emergency law.
The market projects that even with the new legal basis applied, the average U.S. tariff rate will not change significantly in the short term.
The administration also stated that it would design the system to maintain tariff rates similar to existing temporary tariffs.
▲ Investigating 60 global economies over forced labor
The U.S. Trade Representative initiated Section 301 investigations into 60 global economies in March, citing insufficient prohibitions on forced labor within supply chains.
In preliminary investigation results announced earlier this month, a plan to impose 10% tariffs on about a dozen trading partners including Canada, Mexico, and the European Union was presented.
A plan to apply 12.5% tariffs to some 40 countries including China, India, Japan, and South Korea was also included.
Greer explained that this measure will cover 99% of total U.S. trade.
▲ Flood of business requests for tariff exemptions
Once Section 301 tariffs are implemented, they can be maintained without a separate termination deadline.
However, for final implementation, the U.S. Trade Representative must publish a final report reflecting business opinions.
So far, American businesses have submitted over 1,500 comment letters, with many reportedly requesting exemptions from tariff application.
Ryan Majerrus, a King & Spalding lawyer from the U.S. Commerce Department, assessed that the remaining time for preparing the final report and establishing customs enforcement guidelines is extremely tight.
▲ Average tariff rate projected to reach 17% again
While the final tariff rate may be subject to some adjustments, initially it is expected not to deviate significantly from major trade agreements concluded with other countries last year.
The Trump administration capped most U.S. tariffs at around 15% in negotiations with the EU, Japan, South Korea, and others.
Dlong projected that when the new Section 301 tariffs are implemented, the U.S. average tariff rate will recover to levels similar to before the Supreme Court ruling.
Under the current temporary tariff system, the average tariff rate is around 11%, but is expected to rise to around 17% under the new system.
▲ Separate investigation into China's excess production
The U.S. Trade Representative is also conducting a separate Section 301 investigation into industrial excess production issues in China and about a dozen other countries.
The relevant preliminary tariff proposal has not yet been disclosed, but is reportedly likely to be announced as early as next month.
Additional tariffs are expected to be implemented following a period for gathering opinions.
▲ USMCA renegotiation also beginning in earnest
The United States is also simultaneously pushing forward with renegotiating USMCA, North America's largest free trade agreement.
Currently, negotiations between the U.S. and Mexico are progressing actively, with a U.S. delegation visiting Mexico City for a third round of talks.
Meanwhile, formal negotiations with Canada have not yet begun.
Tensions between the two countries have been further heightened as President Trump announced additional tariffs.
▲ Significant burden on Canadian economy
The U.S. secures strong negotiating leverage given that it is Canada's largest export market.
The Bank of Canada already projected in early this year that the country's economic growth rate would be 1.5 percentage points lower than previous forecasts, reaching only 1.1%.
The scope of this additional tariff is limited to $20 billion out of approximately $380 billion in Canadian products exported to the U.S.
However, the legal basis has drawn attention from trade experts.
▲ First application of 1930 Tariff Act Section 338
President Trump applied Section 338 of the 1930 Tariff Act to this tariff on Canada.
This is a provision that allows tariffs to be imposed citing discriminatory treatment against U.S. products, and has never been actually applied until now.
Unlike Section 301, it does not require several months of investigation procedures, allowing the president to impose tariffs more quickly.
Abigail Watt, an economist at UBS, analyzed that while this measure is effective as it essentially neutralizes safeguards in the existing USMCA, it also has a high likelihood of becoming embroiled in legal disputes.
Last year, about 85% of U.S. imports from Canada benefited from duty-free treatment thanks to USMCA.
▲ Possibility of tariff withdrawal if negotiations succeed
However, if negotiations between the two countries show progress, the new tariffs may not be implemented.
Canadian Prime Minister Mark Carney said on the 22nd that he agreed with President Trump to proceed with trade negotiations with greater momentum over the coming weeks.
The new tariffs are set to take effect from August 19th.
▲ Concerns over expanded consumer burden
The Trump administration's tariff policy has also been analyzed to increase the price burden on American consumers.
Federal Reserve researchers estimated that core goods prices, excluding food and energy, rose approximately 3.4% through February due to tariff impacts.
As a result, the overall core inflation rate is analyzed to have increased by approximately 0.8 percentage points.
Jake Colvin, chairman of the National Foreign Trade Council, assessed that businesses substantially agree with the policy goal itself of expanding domestic manufacturing in the U.S.
However, he pointed out that "changing the rules every few weeks and adding new tariffs places a significant burden on businesses in setting up investment and supply chain strategies."
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