Supreme Court Strikes Down Trump Tariffs, But New Trade War Looms for Europe

The legal foundation for Donald Trump’s tariffs has been struck down by the U.S. Supreme Court. But Washington has already shifted its approach, prompting uncertainty in Europe as it navigates the evolving landscape of transatlantic trade.

“I can destroy a country but I can’t even impose a small tax on it,” was President Trump’s reaction to the Supreme Court’s decision invalidating his tariff policy, according to reports. In Brussels and European capitals, there was no immediate celebration, as the situation has become increasingly opaque.

Following the ruling, Trump immediately sought to re-establish tariffs, announcing a 10% global tariff on all products under Section 122 of the Trade Act of 1974. This move came after the Supreme Court, in a 6-3 decision, ruled that his sweeping unilateral tariffs were illegal. The court found that the word “regulate” within the 1977 International Emergency Economic Powers Act (IEEPA) did not grant the president the authority to impose tariffs. Chief Justice Roberts authored the decision.

No previous president had attempted to interpret the law in this manner. The justices did not rule on the question of refunds – potentially totaling $75 billion in cancelled tariffs – leaving it to importers to pursue claims through the courts, a move that could slow down the reimbursement process and mitigate the immediate impact on federal finances.

What about the Turnberry Agreement?

For Brussels, the ruling introduces a new layer of complexity. The so-called “Turnberry Agreement,” reached between Ursula von der Leyen and Donald Trump on July 27, 2025, was predicated on the tariffs now invalidated by the court. A 15% floor – including the most favored nation tariff rate – applied to nearly all European exports since August 7th, encompassing automobiles, semiconductors, and pharmaceuticals, was based on an Executive Order invoking IEEPA. That Executive Order no longer has a legal basis.

In exchange for this arrangement, the European Union agreed to open its market to industrial products by reducing tariffs to zero, commit to purchasing $750 billion in U.S. Energy by 2028, invest an additional $600 billion in the United States, and acquire $40 billion in artificial intelligence chips. The asymmetry of the agreement was already significant, and is now suspended.

Will Trump abide by the Supreme Court?

Trump attempted to fill the void by reimposing a 10% tariff on European imports under Section 122 of the Trade Act of 1974. A key point of contention is Trump’s statement that the 10% tariff would be “in addition to existing duties already in effect.” If this is the case, it would represent a disregard for the Supreme Court’s decision and a significant breach of the American legal order, with potentially far-reaching consequences.

The administration’s choice of Section 122 is not accidental. Unlike Section 232, which requires a Commerce Department investigation and a sector-specific national security justification, Section 122 allows for near-immediate action through presidential proclamation. It specifically targets severe imbalances in balance of payments – a justification the administration previously used for its reciprocal tariffs.

However, the tariffs failed to achieve their intended goal of rebalancing trade. In 2025, the U.S. Trade deficit reached a record $1.241 trillion, a 2.1% increase over the previous year, according to the Department of Commerce.

The Commission must revise its position

Section 122 grants the president limited power. The law caps the tariff rate at 15% and sets a maximum duration of 150 days. After that, the tariffs automatically expire unless Congress intervenes. Trump’s move, represents a temporary position of strength, not a sustainable trade architecture. He will need to secure Congressional approval to maintain the tariffs long-term.

For the European Commission, the new situation requires a reassessment of its instruments. European countermeasures – suspended since August 5, 2025, and extended until August 6, 2026 – have lost their direct target, as the legal basis for the IEEPA tariffs has collapsed. Reinstating them would be legally questionable and diplomatically risky. Maintaining them in suspension would amount to accepting the new Trumpian status quo without guaranteed reciprocity.

European Parliament resists

Adding to the complexity, the European Parliament suspended a vote to ratify the Turnberry framework agreement on January 21st, due to U.S. Threats regarding Greenland. Some groups are proposing a reversibility clause if the U.S. Were to reiterate its threats against Europe. Currently, there is no formally ratified agreement on the European side, nor a stable legal basis on the American side. The situation remains unclear. A debate among member states and within the European Parliament is necessary.

The 150-day clock begins on Monday. Brussels has until mid-July to negotiate a solid agreement. However, the upcoming U.S. Midterm elections in November could reshape the political landscape. Over the past year, Trump’s base of support has shrunk, and the number of Americans who disapprove of his policies now exceeds his supporters. The European Union may be betting that Congress will ultimately neutralize Trump.