Trump 2.0: The TACO Effect Shaking Global Trade & U.S. Court ruling against aggressive tariffs
- GMCCTradeteam
- 3 days ago
- 3 min read
Updated: 2 days ago
In his second time in the oval office, President Donald Trump has reignited his "America First" trade agenda, introducing a new 'trade policy pattern' of imposing aggressive tariffs on steel, aluminium, and other imports, which are shortly followed by retreats, pauses, delays or renegotiations when faced by economic and political pushback. This approach has been now known as the 'TACO effect' - short for "Trump Always Chickens Out". This term coined by the Financial Times Columnist Robert Armstrong from the Financial Times.
The TACO approach, as we know, has impacted global trade and economies in a scale not seen in decades and simply showcases the inconsistency on Trump's trade policies, although the President himself explain it was not lack of consistency but rather strategic negotiation tactics. Either way, President's Trump tactics do not seem to be yielding the results expected, and just last week, encounter a hiccup as a group of small businesses alongside 12 Democratic-led States filed a lawsuit against Trump's sweeping tariffs.
In a significant legal development, the U.S. Court of International Trade ruled in favour of these businesses and 12-states saying that President Trump had exceeded its authority by imposing sweeping tariffs under the International Emergency Economic Powers Act (IEEPA). The court determined that IEEPA did not grant the president the power to unilaterally set these tariffs and ordering the vacating of these and a permanent injunction against this enforcement, which could mean that if tariffs are deemed unlawful, then U.S importers could be owed billions in refunds and compensations.
However, as expected, shortly after, the ruling was appealed by Trump's Administration to the U.S. Court of Appeals for the Federal Circuit. On May 29, the appeals court granted an administrative stay, allowing the tariffs to remain in effect while the appeal is considered. The court set deadlines for filings: plaintiffs must respond by June 5, and the administration can reply by June 9. The developments have only but fuel ongoing uncertainty and left business and foreign leaders scrambling trying to understand what this means for ongoing trade negotiations.
Last week as well, President Trump in his true TACO approach style, announced increases in steel tariffs from 25% to 50%, and whilst the new US-UK Economic Prosperity Deal was announced, it has yet to be implemented, meaning that British exports are still exposed to the new 50% tariff, and this move is threatening UK's £400m annual exports of steel to the US, which industry fear will leave to order cancellations and financial strains.
Also, following what he called 'slow and difficult negotiations with the EU', he threaten to imposed 50% tariffs in EU's goods effective on 4th June, although soon enough it was announced these were delayed till 9th of July. The EU, however, has warned of potential retaliatory measures if a balanced agreement is not within reach.
Are you a UK Business impacted by US Tariffs?
The Chamber is at hand to help. Take a look a few things we can support SMEs with:
Stay up to date with latest Trump's Announcements in our Blog 'Keeping Up with Trump's Tariffs' where we are tracking tariff's announcements and impact.
Check our US Tariffs Resource Hub - where we have compiled hand-picked guidance from official sources and resources to help you understand the ongoing developments.
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Sourced: Go Exporting, Customs Manager, Sky News, The Guardian, AP News, Financial Times, The Times, Politico, The Star
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