Trump says US may have to ‘unwind’ trade deals and will ‘suffer greatly’ if it loses tariff case

WASHINGTON – President Donald Trump said on Sept 3 the US might have to “unwind” trade deals it reached with the European Union, Japan and South Korea, among others, if it loses a Supreme Court tariffs case, and warned that a loss would cause the US “to suffer so greatly”.

Mr Trump, speaking to reporters at the White House, said

his administration will ask the Supreme Court to reverse a US appeals court ruling

last week that found many of his tariffs were illegal.

The US President, however, said he thought his administration would prevail in the case.

“We made a deal with the European Union where they’re paying us almost a trillion dollars. And you know what? They’re happy. It’s done. These deals are all done,” he said. “I guess we’d have to unwind them.”

The comments were his first specifically suggesting the trade deals reached with major trading partners – which were negotiated separately, outside of the tariffs – could be invalidated if the Supreme Court lets the Aug 29 ruling stand.

Mr Trump said rescinding the tariffs would be costly, although trade experts note that the tariffs are paid by importers in the US, not companies in the countries of origin. Economists have warned that tariffs are likely to fuel inflation in the US.

“Our country has a chance to be unbelievably rich again. It could also be unbelievably poor again. If we don’t win that case, our country is going to suffer so greatly, so greatly,” he said.

The appeals court ruling addressed the legality of what he calls “reciprocal” tariffs first imposed as part of a trade war in April, as well as a separate set of tariffs imposed in February against China, Canada and Mexico. The decision does not impact tariffs issued under other legal authority, such as those on steel and aluminium imports.

Trade experts said his comments on the cost of rescinding the tariffs were intended to convince the Supreme Court that removing the tariffs would unleash major economic chaos.

Mr Ryan Majerus, a former senior US trade official who is now a partner with law firm King & Spalding, said it had been clear from the start that the trade deals with the EU and other trading partners were framework agreements that were subject to change, not fully fledged trade agreements.

“The US President’s announcement today that the deals could be unwound reflects an effort to maximise leverage on the US side,” he said.

Legal and trade experts say the Supreme Court’s 6-3 majority of Republican-appointed justices may slightly improve Mr Trump’s odds of keeping in place at least some of the tariffs after the appeals court ruled 7-4 last week that they are illegal.

But they say it is difficult to predict exactly what the court will do, given rulings in past cases and the unprecedented nature of the challenge.

Senator Ron Wyden, the top Democrat on the Senate Finance Committee, said Mr Trump’s comments sowed more confusion.

“The Trump administration can’t get its story straight about whether its trade deals will hold any water if the tariffs are struck down,” he said. REUTERS