As the justices weigh limits on Trump’s trade authority, foreign governments continue to seek deals, while hoping the case may give them more leverage.
The White House is plowing ahead with negotiations on tariffs, despite the fact the Supreme Court may soon strike down a large chunk of them. And foreign trading partners are still playing ball.
According to more than half a dozen foreign diplomats and people close to the negotiations, some of whom were granted anonymity to discuss strategy, other governments continue to press for deals to avoid President Donald Trump’s tariffs on sectors like autos and steel and others (as well as threatened ones on pharmaceuticals and semiconductors), which are not affected by the court challenge. And they are betting the administration will be able to use other laws to reimpose at least some of the duties that could be struck down.
At the same time, foreign countries expect talks with the administration to progress more quickly as the Supreme Court weighs the limits of Trump’s tariff powers. And they are betting that a ruling against Trump’s tariffs could weaken his bargaining power, giving smaller economies a better chance to shape future pacts.
“The door is open a peek,” said an official from a small country in Europe, who was granted anonymity to discuss strategy. “We intend to wedge a foot in it.”
The official added that their country and others that have not yet nailed down trade agreements with the White House are under pressure to match “the best outcomes vis-à-vis other nations” that have reached deals to lower their tariffs — regardless of how the court rules.
The Supreme Court justices last week voiced skepticism during oral arguments over the scope of Trump’s authority to impose tariffs under a 1970s-era law, the International Emergency Economic Powers Act. Trump cited the law to raise duties on Canada, Mexico and China over what he claimed was an immigration and fentanyl-trafficking emergency, as well as the “reciprocal” tariffs he hit all of the U.S.’ major trading partners with this summer, citing a national emergency over the trade deficit.
The case doesn’t, however, affect the dozen or so trade investigations Trump has launched into critical industries under a different trade law — several of which have already resulted in higher tariffs on imports like steel, aluminum, autos, auto parts and lumber.
Those duties were a major factor in the deals the Trump administration struck this summer with trading partners like the European Union, South Korea and Japan. All three have influential auto sectors that were hit by the 25 percent U.S. tariff on cars and car parts, putting pressure on their governments as they raced to stay competitive in the massive U.S. market. In each case, they reached an agreement that lowered tariffs on specific industries — aside from steel and aluminum — to 15 percent, including on industries like pharma and chips where Trump has promised to raise tariffs, but not imposed higher rates yet.
Wendy Cutler, a former deputy U.S. Trade Representative focused on Asia, agreed that trade partners’ “decisions to proceed are based on a desire not to be left behind their competitors whom have sealed deals,” for lower duties on items like cars and drugs. There’s also “a strong belief that regardless of the legal developments, tariffs are here to stay in one form or another,” Cutler said, so there’s “no indication that they are slow-walking the talks.”
Take the Swiss. The country was blindsided by a 39 percent “reciprocal” tariff on its goods in August — more than double the duty on goods the European Union was able to negotiate with Trump in July. That has devastated some of the country’s signature industries, threatening exports of precision instruments and creating chaos among the country’s dairy farmers.
Trump on Monday reiterated that the U.S. is making progress towards a lower tariff rate with Switzerland, speaking to reporters from the Oval Office.
“I haven’t said any number, but we’re going to be working on something to help Switzerland along,” Trump said. “We’re working on them, and some others, and we’re working on others to increase them a little bit, too.”
Negotiations appeared to pick up steam last week — the same week the Supreme Court heard oral arguments in the emergency tariff case — after the CEO of Rolex and other Swiss business leaders met with Trump at the White House. U.S. Trade Representative Jamieson Greer later affirmed that the talks are making progress.
“The idea was to use this moment to get some fresh air in here and see if we can get something done in the next couple of weeks,” said Rahul Sahgal, the CEO of the Swiss-American Chamber of Commerce.
Sahgal said he expects Trump to impose tariffs, even if the Supreme Court strikes down the president’s “reciprocal” duties and others he imposed on individual countries this winter and spring. The country’s powerful pharmaceutical industry is also staring down the possibility of sector-specific tariffs unaffected by the case.
But Sahgal said the possibility of a legal defeat, and a more onerous process to reimpose global tariffs, has also spurred the Trump administration to try and secure more deals before the Supreme Court weighs in — a ruling that could potentially come by the end of the year.
“I do think it makes a big difference,” he said.
White House spokesperson Kush Desai defended the administration’s goal of ending “lopsided” trade arrangements and foreign trade practices that hurt American workers in a statement to POLITICO.
“The Administration is committed to delivering on this pledge, and our trading partners are better off working with the Administration [to] address restrictive trade barriers and other unfair trade practices instead of trying to read tea leaves,” Desai said.
Trump last week also touted a new Uzbekistan deal worth billions after meeting with a group of Central Asian countries. And after reaching a new detente in the trade war with China, the administration is accelerating negotiations with Taiwan and countries across Asia.
Taiwan has continued to pursue a trade deal with the U.S. despite the possibility that the Supreme Court could overturn the current 20 percent tariff on the island’s exports to the U.S. That’s because Taipei’s bigger concern is the possibility that an ongoing Commerce Department probe could lead to new tariffs on its globally dominant semiconductor industry — under a separate legal authority.
The Trump administration and government are currently haggling over a provision of the deal requiring Taipei to invest billions of dollars in the U.S., modeled on similar commitments the administration has struck with South Korea and Japan. The value of that investment pledge will be “midway between South Korea’s $350 billion and Japan’s $550 billion,” the person said.
Taipei is aiming to finalize the deal by the end of this month if the shutdown ends soon, said a person familiar with the talks granted anonymity to speak about them.
The Trump administration is also engaged in talks with countries in the Western Hemisphere, including Central American nations, which remain particularly exposed to tariffs on sectors like steel, aluminum, and copper.
“You saw it last week in Asia as he struck deals with a number of Southeast Asian countries and East Asian countries. You’ll see it again this month in the Western Hemisphere and elsewhere,” Greer said in an interview with Fox Business Network on Thursday.
Smaller economies in the region are hoping they now have an opening — including Paraguay, which is aiming to secure commitments to boost beef exports to the U.S., one official close to talks told POLITICO. For now, trade discussions remain “technical, focused on the details,” said the Paraguayan official, “but those will advance soon.”
The U.S. and India also continue to negotiate to lower the 50 percent duty Trump has imposed — a tariff that could be invalidated by the Supreme Court case. The two sides are still struggling to bridge differences on U.S. agriculture export access and U.S. tariffs to pressure India to end its Russian oil imports, according to a person familiar with the negotiations.
“India is now only buying oil from the open market — it’s honoring existing contracts for Russian oil but not signing new ones,” said the person.
Trump on Monday said the U.S. is closing in on a deal with India and would “at some point” reduce the tariffs he slapped on the country. “They’ve stopped doing the Russian oil — it’s been reduced very substantially,” Trump said.
Vietnam’s pursuit of a deal to lower its 20 percent tariff has also been unaffected by a possible Supreme Court decision.
Vietnam’s Industry and Trade Minister Nguyễn Hồng Diên arrived in Washington on Monday for a fresh round of talks that will continue through Wednesday, said a source familiar with those negotiations granted anonymity because of their sensitivity. They underscore the willingness of U.S. and Vietnamese negotiators to stick to a pre-agreed schedule of talks despite the uncertainty posed by a looming Supreme Court ruling on the legality of the tariffs. But an imminent breakthrough is unlikely.
“Nothing final is expected this round,” the person said.
A second person with knowledge of the U.S.-Taiwan talks was also hesitant to predict when the talks would wrap up, citing Trump’s track record of last minute reversals on trade deals.
“I’ve given up on trying to predict when Trump will finally agree,” said the person.