Allies that made deals with Trump now face a reckoning

President Donald Trump's trade agenda suffered a major setback when the U.S. Supreme Court, in a bombshell 6-3 ruling on Friday, February 20, struck down most of his tariffs as illegal. The majority included three appointees of Democratic presidents — Justices Sonia Sotomayor, Ketanji Brown Jackson and Elena Kagan — and, on the Republican side, Chief Justice John Roberts and two Trump appointees: Justices Neil Gorsuch and Amy Coney Barrett.

The three dissenters were Justices Clarence Thomas, Brett Kavanaugh and Samuel Alito.

Trump was furious over the Learning Resources, Inc. v. Trump decision, attacking the six justices as a "disgrace."

In an article published on February 22, New York Times reporters Alexandra Stevenson and River Akira Davis examine the challenges that the ruling presents for countries that worked out trade deals with the U.S. president.

"It started as a week of trade wins for President Trump," Stevenson and Davis explain. "On Tuesday, (February 17), Japan committed $36 billion in investments in the United States, and on Thursday, (February 19), the president of Indonesia signed a deal in Washington to open up critical sectors of the country's economy to American companies. The moves were part of trade deals both countries had signed under the threat of massive tariffs, unlike anything they had faced in modern times — up to 35 percent in Japan's case and 32 percent for Indonesia. Mr. Trump hailed the developments as signs that the United States was 'WINNING again.'"

The Times reporters continue, "But by the end of the week, it was no longer clear who, if anyone, was winning. On Friday, the Supreme Court struck down the legal premise of Mr. Trump's punitive tariffs. After the ruling, he said many of the deals would stand, although he acknowledged that some might not and those would be replaced by other tariffs."

Stevenson and Davis note that before the High Court's decision, Asian countries "raced to do deals with Mr. Trump" in order to "negotiate lower tariffs for their export-dependent industries."

"Many government leaders who brokered deals and made significant pledges faced political recrimination at home, accused of giving away too much and, at times, even sacrificing national sovereignty," according to the Times reporters. "With damaging tariffs hanging over them, countries like Japan and Indonesia — not to mention South Korea, Taiwan, Malaysia, Cambodia and India — made difficult concessions like lifting many of their tariffs on imports from the United States. Some even promised to align with Washington on sanctions, issues of national security and sourcing critical minerals, major undertakings that have irked constituencies at home as well as trading partners like China."

Steven Okun, chief executive of the geopolitical consulting firm APAC Advisors, told the Times, "Countries which signed deals with the U.S. and agreed to a tariff above 15 percent are now disadvantaged. Do you renegotiate and drive a harder bargain since Trump's leverage is diminished? Or keep what you have to avoid retaliation?"