Almost half of US imports now have steep tariffs

President Trump's second term has dramatically expanded U.S. import tariffs, now affecting nearly half of all goods, with a significant portion (29% of imports, exceeding $300 billion) under Supreme Court review regarding the legality of using the International Emergency Economic Powers Act (IEEPA). A ruling against the President would nullify a major trade policy tool, though 16% of imports would remain tariffed under other authorities, leading to varied impacts across trading partners like China, which faces over 40% trade-weighted tariffs, and the EU, where 60% of goods now face duties, thereby reshaping global trade dynamics.

Analysis

President Trump's second term has dramatically reshaped U.S. trade policy, with nearly half of all goods entering the country now subject to tariffs, a significant increase from pre-term levels. A key legal challenge is underway at the Supreme Court regarding the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs on an estimated 29% of U.S. imports, totaling over $300 billion this year. Justices appeared skeptical during oral arguments on November 5th, suggesting a potential nullification of this major trade policy tool.

Despite the Supreme Court's potential ruling, approximately 16% of American imports will remain heavily tariffed under other authorities, such as Section 232, which are not under judicial review. The impact of these tariffs varies significantly by trading partner; China faces a trade-weighted average rate exceeding 40%, while the European Union has seen 60% of its exports to the U.S. become subject to tariffs, up from about 25% previously.

However, the administration has also implemented strategic exemptions for critical products, including pharmaceuticals from Ireland and electronics from Taiwan, and for USMCA partners like Canada and Mexico, where most goods now enter duty-free. This selective application creates a complex and uneven global trade landscape, with a ruling against the President potentially shifting the focus towards broader application of industry-specific duties.

Key Decisions for Investors

• Investors should closely monitor the Supreme Court's decision on the IEEPA tariffs, as a ruling against the President could significantly alter the U.S. trade landscape and impact import costs for various sectors.
• Evaluate portfolio exposure to countries and industries heavily affected by current tariffs, such as China (over 40% trade-weighted average) and the EU (60% of exports now tariffed), and assess the resilience of their supply chains.
• Consider the implications of potential shifts towards more widespread industry-specific tariffs if the President's emergency powers are curtailed, and identify companies that may benefit from existing strategic exemptions or face new duties.