“Europe breathed a sigh of relief when the Supreme Court curtailed President Trump’s unilateral tariff powers under emergency laws, but the administration’s swift imposition of a new 10% global tariff and unresolved questions about refunds and existing agreements have ignited a new round of trade uncertainty, threatening to disrupt carefully negotiated deals and distract from pressing priorities like Ukraine support and countering Chinese trade practices.”
Europe’s Cautious Response to the Supreme Court Verdict
The Supreme Court’s decision invalidated tariffs enacted via IEEPA, which Trump had used to impose broad duties on imports from nearly every trading partner, including significant levies on EU goods. This authority, originally designed for genuine national emergencies, was deemed by the majority opinion—penned by Chief Justice Roberts—as exceeding presidential bounds, since tariffs constitute a form of taxation reserved for Congress. The ruling affirmed lower court findings and opened the door for potential refunds of billions in collected duties, though the Court deferred specifics on reimbursement eligibility to lower courts.
European reactions were mixed from the outset. The European Commission emphasized the need for “stability and predictability” in transatlantic trade, with spokesperson Olof Gill highlighting that businesses on both sides rely on clear rules. German industry federation BDI urged swift clarification on implications for the EU-U.S. trade framework agreed upon last summer, stressing that companies require planning security amid ongoing burdens. British Chambers of Commerce described the verdict as doing “little to clear the murky waters,” noting persistent risks from alternative executive tools.
Immediate Pivot Sparks Renewed Concerns
The administration’s response—implementing a replacement 10% global tariff almost immediately—amplified European anxieties. This move applies broadly, potentially overriding negotiated concessions in recent bilateral pacts with the EU, UK, India, Japan, and others. White House statements indicated expectations that partners honor their side of deals while facing the new baseline levy. European exporters now confront uncertainty over whether these agreements remain viable or require renegotiation.
Sectors with heavy U.S. exposure feel the pinch most acutely. Italian wine producers, long vocal about prior duties, worry about order freezes and market instability. German chemical and engineering firms, including giants like BASF and Bayer, anticipate continued volatility in supply chains. The broader EU economy, already navigating energy transitions, inflation pressures, and geopolitical strains, risks diverted attention from critical issues such as supporting Ukraine and addressing perceived unfair Chinese practices.
Key Implications for Transatlantic Trade
Tariff Refunds in Limbo : Estimates suggest over $100-175 billion collected under IEEPA tariffs could be subject to refunds, but procedural hurdles and lack of clarity on eligibility create delays and legal battles.
Status of Bilateral Deals : The EU-U.S. agreement from mid-2025, involving tariff reductions in exchange for investment commitments and non-tariff barrier removals, faces scrutiny. Some European parliamentarians may now resist ratification, citing shifted dynamics.
Alternative Authorities Loom : The president retains tools like Section 301 (unfair trade practices) and Section 232 (national security), with ongoing investigations into products such as semiconductors, pharmaceuticals, and copper potentially leading to targeted duties.
Market and Business Reactions : European stocks showed volatility post-ruling, with initial gains tempered by fears of escalation. Trade groups warn of “boomerang effects,” where short-term relief gives way to prolonged uncertainty, stalling investments and orders.
Broader Economic Context
This development arrives as Europe seeks calm after a turbulent period of transatlantic friction. The ruling limits one avenue for aggressive unilateralism but does not dismantle protectionist impulses. Analysts note that Trump’s long-standing tariff advocacy persists, potentially through more sector-specific or congressionally supported measures. For EU exporters, the net effect may be a shift from broad emergency levies to a patchwork of targeted barriers, complicating compliance and forecasting.
Business leaders across the continent stress the human cost: disrupted supply chains raise costs for consumers, while uncertainty hampers job-creating investments. Unions and worker representatives echo calls for certainty, highlighting past “chaos” that led to employment losses.
European policymakers now prioritize dialogue with Washington for clarity, while preparing contingencies. The Commission continues reviewing the ruling’s full scope, balancing optimism over restored rules-based order with realism about persistent risks.