DJI -0.36%

Tariffs on US Trading Partners: Limited Resistance Anticipated

Despite unprecedented tariff announcements by President Donald Trump, there are few indications that outside forces can swiftly overturn his decision. Rhetorical opposition from Wall Street and Capitol Hill is expected, but legal and political challenges may be protracted.

Canada's ambassador to the US acknowledges that tariffs lie primarily in Trump's hands. Sunday and Monday witnessed a series of discussions between Canada and Mexico to avert tariffs scheduled for Tuesday.

A breakthrough emerged on Monday, with Trump and Mexican President Claudia Sheinbaum announcing a delay in 25% duties on Mexico. The fate of 25% duties on Canada and 10% duties on China remains uncertain.

Trump communicated with Canadian Prime Minister Justin Trudeau on Monday, indicating a more aggressive tone and raising issues such as Canada's banking restrictions.

Market volatility may influence Trump's decision, but he has expressed willingness to disregard market indicators. Capitol Economics suggests that sustained tariffs could exacerbate market turbulence.

Congressional Opposition

Senate Majority Leader Chuck Schumer condemns Trump's move, pledging to propose a bill that could restore some tariff power to Congress. However, the current political landscape and the delegation of tariff authority to the executive branch may hinder such efforts.

Legal Challenges

Trump's actions will likely face legal challenges, particularly if tariffs take effect. Business groups are expected to participate in legal actions. Experts caution that Trump's invocation of national security could deter judges from intervening.

China's Response

China plans to file a lawsuit against the US through the World Trade Organization. However, the watchdog's authority has been limited since 2019 due to the blockage of judicial appointments.

Uncertain Future

Trump has indicated the possibility of additional tariffs, including on semiconductors and steel. The impact of the tariffs remains uncertain, with a protracted resolution likely.