Donald Trump’s tariffs stopped two US dishes. An appellate court stands against it. The German-American economist Rüdiger Bachmann explains what this means for the economy and the political agenda of the president.
Donald Trump’s customs policy is the central pillar of his “America First” promise. The penalty taxes against other countries are considered to be a symbol of strength, self -assertion and economic independence for him and many of his voters. But now exactly this strategy is shaking: two dishes have declared the tariffs illegal. An appellate court initially raised their orders in the urgent procedure.
What sounds on legal questions could turn out to be a political turning point. Because the judgments not only question Trump’s business course. They touch the core of his understanding of power. What does that mean for the USA, the markets and democracy? In an interview with T-Online, the economist Rüdiger Bachmann warns the all-clear.
T-online: Mr. Bachmann, two courts-the commercial court in New York and a federal court in Washington-clearly rejected Donald Trump’s customs policy. Is everything good now?
Rüdiger Bachmann: No, everything is still well. Of course, this was good news, also for the markets that reacted accordingly. After all, the judgments were not only against a single measure by Trump. In principle, all of his tariffs, especially the 10 percent base tariffs, were lifted. Only the tariffs remain for reasons of national security, such as cars and steel. This is a clear legal defeat for Trump’s customs policy and economically gratifying at first.
But it is still too early for breathing, they say?
Correct. Because we still have what economists “Trade Policy UncertaAnty”, that is, trade uncertainty. This is a fixed term in the specialist literature. This means the uncertainty of how it will go on. In paradoxically, the judgments even increased again. So far, there has been uncertainty because nobody knows what will come out of the many agreements that have just been negotiated. Now legal uncertainty is added, so how the further path will run through the dishes.
Because the Trump government immediately appealed?
Exactly. That is why economic uncertainty could become even more fluctuating. An appellate court has already paused the New York judgment again, but has not yet decided in the matter. The matter is probably up to the Supreme Court. So everything can move back and forth several times. This additional legal uncertainty increases the already existing negotiation uncertainty, even if the first economic effect of the current news is only positive.
Rüdiger Bachmann, born in 1974, is an internationally recognized economist and expert in macroeconomics. He teaches as a professor of economics at the American University of Notre Dame in the state of Indiana. He is also a research affiliate at the Center for Economic Policy Research (CEPR), researches the IFO Institute in Munich and is a member of the Atlantic Bridge. Bachmann has researched topics such as economic uncertainty, inflation and international trade relationships and is regularly active as a consultant for central banks and international business organizations and his analyzes on global economic policies are published in leading specialist journals and media.
A central point in the dishes seems to be the definition of “national emergency”. Trump uses this argument to impose its tariffs past the congress. The dishes now say that there is no need. Does that strengthen democracy?
This is certainly a progress. The big question, however, is whether this interpretation will also exist before the Court of Appeal and the Supreme Court. This is legally open. It is exciting, however, that the judgment of the commercial court was unanimously made by three judges, each of which was appointed by Ronald Reagan, Barack Obama and Donald Trump. Apparently there was no dissent. So there is no excuse for Trump. That is remarkable.
One of his closest consultants, the conservative hardliner Stephen Miller, nevertheless immediately referred to the judges as “tyrants” and, in turn, paints the end of democracy on the wall.
Yes, of course that is the usual rhetoric. The more interesting question is whether Trump may not even use the judgment as an elegant exit ramp. Maybe he just drops the tariffs because he realized that they were nonsense without having to admit. Then it is not him, but the judges are. The markets would then be booming, and for the intermediate elections next year nobody remembers the customs disaster, but only the strong economy. Critics such as finance minister Scott Bessent or Elon Musk were against the tariffs from the start anyway. Perhaps Trump can now be convinced of this view.
