The Supreme Court Ruling Was Bad for Business

... at least for a little while

On Friday, the US Supreme Court decided to ruin my weekend away with friends by ruling that Trump’s International Emergency Economic Powers Act (IEEPA) tariffs are illegal.

This means that his country-specific “reciprocal” tariffs, and those other tariffs on China, Canada, and Mexico linked to fentanyl (no, to this day no one actually knows what’s going on there) needed to go.

Trump of course then did exactly what I, and others, said he would do [note the date of the piece] and used Section 122 of the 1974 Trade Act to impose a new 10% 15% tariff for 150 days, while he comes up with new methods of slapping things with tariffs.

And this outcome is why the Supreme Court ruling “may be good for the US constitutional order, but is materially worse for anyone exporting to the United States. At least in the short/medium term.

Instead of a fixed[ish] tariff rate, we now have to deal with …

• Uncertainty about how the deals the US negotiated with countries interact with the new S122 15% tariff rate. The obvious one is the UK, which has been benefiting from a 10% reciprocal tariff which was never actually written into the the US-UK Economic Prosperity Deal (seriously, read it again). But even exporters in those countries such as the EU, Japan and South Korea which already face a negotiated 15% rate potentially face higher tariff rates due to the possibility that the new 15% rate now stacks on top of pre-existing US MFN tariffs, unlike the reciprocal 15% rate.

• Uncertainty about where new tariffs will fall. The administration has been sitting on Section 232 and Section 301 investigations linked to, for example, pharmaceuticals, semiconductors, critical minerals and digital services taxes for a while now. We’ve got to assume that these are going to appear and hit hard in the coming weeks and months. But hit where? Hit who? Hit how? We don’t quite know yet.

• DERIVATIVES! As I wrote back in November last year, one of the tariff options available to the US is a massive expansion of the derivative lists attached to, e.g., the steel, aluminium, copper and lumber tariffs (and semiconductor, rare earths in future). These tariffs are particularly difficult for companies to manage because they apply to, e.g. the value of the steel contained within an excavator. These types of tariffs are really really annoying and now there’s a reasonable chance we’re going to get more of them.

• Pretty much a re-run of the first 6 months of last year.

Of course, there is at least one upside: tariff volatility is excellent for Substack traffic.

Small mercies.

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Chart of the week

DG Trade’s Lucian Cernat has already made this chart … which tells us … something?

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Strategic Assets

In the day job, colleagues and I have been writing about medicines becoming less of a public good and more of a strategic asset.

Here’s a segment:

The threat of US Section 232 tariffs on pharmaceuticals, first raised in April 2025, overturned the decades-old norm that medicines were, implicitly, a public good that should not be tariffed.

But the conditions for more restrictive trade flows have been building for years. COVID demonstrated that where medicines are developed and manufactured can prove consequential when demand outstrips supply or trade routes are disrupted.

For countries that felt left behind in the rush for vaccines and therapeutics, belief in the values of the intellectual property regimes underpinning pharmaceutical innovation further frayed.

With international institutions like the WTO and WHO weaker than ever, the multilateral order can no longer be taken for granted. The result is not simply more friction, but a reframing of medicines as strategic industrial assets, subject to similar resilience, security and leverage logic now being applied to semiconductors, batteries and critical minerals.

Economic security has therefore become a defining feature of medicines policy. The US’s BIOSECURE Act, restricting Federal procurement from certain biotech firms on national security grounds, is one example.

In this environment, firms must assume that tools once considered exceptional, such as export controls, FDI screening, cross-border data restrictions, merger restrictions, and tariffs can be normalised quickly. Strategic competition between the US and China, with the EU increasingly deploying similar instruments, is setting the parameters within which others must operate.

Read the full piece HERE.

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Note: For those hoping for a piece about the EU’s flirtation with CPTPP and what a new treaty focusing on cumulative rules of origin could look like, I can only apologise and say: next time!

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Best,

Sam