Commenting on the decision on Friday by the US Supreme Court to declare President Trump’s reciprocal tariffs illegal NWU Business School economist Prof Raymond Parsons says:
‘The decision by the US Supreme Court that President’s Trump’s reciprocal tariffs are illegal is a welcome respite for many countries, including South Africa, who have had to grapple with an aggressive US tariff policy in recent times. The Supreme Court upheld the principle that the rule of law applies to any changes in US import tariffs, and that legal remedies are possible for businesses wanting to redress the situation. The Supreme Court did not, however, address the question of whether the illegal import duties paid so far now would require to be repaid, and this will have to be litigated separately.
Although US Supreme Court has now in effect also made the 30% import tariff recently imposed on South Africa by President Trump illegal, it is essential to remain realistic. The Court decision does not in reality simply mean going back to square one in the erratic configuration of US tariff policy. Under alternative legislation, President Trump has now imposed a new broad tariff of 15% – within a day of a previously announced tariff of 10% – for a period of 150 days, pending Congressional approval. Additionally, certain key sector-specific tariffs, such as on steel and automotives, are in any event excluded from the Supreme Court’s decision.
The immediate economic impact of the Court’s verdict is therefore inevitably a recipe for more confusion and uncertainty, including for SA business, about future US trade policy. The net effect of the latest changes in US tariff levels needs to be urgently clarified by countries like South Africa, who do important business with the US. President Trump is still determined to rebuild US tariff walls, and the threat of new tariffs remains real. The future of AGOA and South Africa’s continued participation in it are also on a completely separate policy track. Tough negotiations with the US still lie ahead for South Africa.’