Donald Trump has described tariffs as the most beautiful word in the world to him, a sentiment he emphasized on January 20, last year, when he began his second term as president of the United States. In his inaugural address, he declared America First and vowed that the U.S. would no longer be taken advantage of.
Since then, he has relentlessly disrupted the global free trade order by wielding tariffs as his primary weapon. From the fentanyl tariffs imposed on Mexico, Canada, and China to item-specific tariffs justified by the protection of key industries like automobiles and steel, culminating in the reciprocal tariffs, Trump’s second-term administration has unleashed a barrage of tariffs without respite.
Now, Trump’s tariff strategy faces a critical juncture, pending the U.S. Supreme Court’s imminent final ruling. As speculation mounts that a decision on the legality of reciprocal and fentanyl tariffs based on the International Emergency Economic Powers Act (IEEPA) could come at any moment, Trump continues to ratchet up pressure with new tariff threats on semiconductors and Greenland.
The tariff policy of Trump’s second term has not been a single sweeping measure, but rather a gradual, strategic expansion.
The opening salvo came less than two weeks after his inauguration with the announcement of fentanyl tariffs, ostensibly to address drug influx and illegal immigration. Trump swiftly imposed tariffs on China, accusing it of allowing synthetic opioids like fentanyl to flood into the U.S. This move marked the beginning of using tariffs as a multipurpose tool to exert pressure not just on trade issues, but also on diplomatic and security matters.
Subsequently, tariffs expanded on an item-by-item basis. In March, invoking Section 232 of the Trade Expansion Act, Trump classified steel, aluminum, automobiles, and later semiconductors as strategic items threatening national security, thus subjecting them to tariffs. Notably, for semiconductors, which have recently been subject to more stringent tariffs, he proposed conditional exemptions tied to U.S. investments, further escalating pressure on major producing countries.
The tariff policy reached its zenith with the April 2 announcement of reciprocal tariffs. Dubbing this day Freedom Day, Trump unveiled country-specific reciprocal tariffs targeting the entire globe, based on the IEEPA. He set a baseline 10% tariff with variable rates by country, leaving room for negotiated reductions and using it as a tool to distinguish between allies and adversaries.
The U.S.-China trade front saw the most dramatic fluctuations. Amid mutual retaliation between the world’s two largest economies, U.S. tariffs on Chinese goods skyrocketed to 145%, while China’s tariffs on U.S. products hit 125%. Markets reeled from the shock of near-total trade disruption. However, high-level negotiations led to a ceasefire, with the U.S. agreeing to lower additional tariffs on China to 20%, and China reducing its tariffs on U.S. goods to 10%.
Recently, Trump has signaled plans to impose additional tariffs on European nations over the Greenland issue, indicating that even in the second year of his term, his administration will continue to leverage tariffs as a comprehensive pressure tactic, extending beyond trade to enforce its will on diplomatic and security matters.
The next major turning point hinges on the Supreme Court’s judgment regarding IEEPA-based tariffs. Lower courts have ruled that reciprocal tariffs based on the IEEPA exceed presidential authority, while the Supreme Court is currently deliberating their legality.
Regardless of the outcome, the repercussions will be significant. A ruling against the administration could trigger a flood of refund lawsuits, potentially causing extreme chaos. Victor Cha, the Korea Chair at the Center for Strategic and International Studies (CSIS) in Washington, D.C., recently estimated that an adverse ruling could force the administration to refund $150 billion in tariff revenues collected from over 300,000 companies.
Cha highlighted the major South Korean companies most affected by the ruling, including Hyundai and Kia Motors, Samsung Electronics, SK hynix, Celltrion, LG, Lotte, Kumho Petrochemical, and Hanwha Solutions.
Trump recently took to Truth Social to warn that if the court ruled the tariffs illegal, the amount eligible for refunds could reach hundreds of billions of dollars. He further argued that this figure would not even include potential compensation claims from countries and companies that built factories in the U.S. to avoid tariffs, suggesting that total costs could rise into the trillions. The remarks were widely viewed as an effort to pressure the judiciary publicly.
Meanwhile, the administration and conservative factions are discussing a Plan B in the event of an unfavorable ruling, citing Sections 232 and 301 of the Trade Expansion Act and Section 338 of the Tariff Act.
As mentioned earlier, Section 232 allows tariffs or quotas on imports deemed threats to national security, providing the legal basis for tariffs on steel, aluminum, automobiles, and semiconductors.
Section 301 of the Trade Act permits retaliatory tariffs against unfair trade practices by other countries, a tool Trump wielded during his first term in the trade war with China.
Section 338, dubbed the nuclear option, allows for up to 50% additional tariffs on imports from countries discriminating against U.S. products. Though unused since the 1930s, it’s expected to face legal challenges similar to IEEPA-based tariffs.
Even if the administration prevails in court, uncertainty will persist. A ruling upholding reciprocal tariffs could entrench IEEPA-based tariffs as a permanent negotiating tool for the Trump administration, further tightening the screws on other nations.
Regardless of the lawsuit’s outcome, the Trump administration continues to broaden its tariff offensive.
The recently announced semiconductor tariffs have once again heightened tensions for South Korea, a major exporter in this sector.
U.S. Commerce Secretary Gina Raimondo recently said at a Micron factory event that the message was straightforward: companies would either face a 100% tariff or produce in the United States, underscoring that only domestic investment and production would qualify for lower tariff rates.
The U.S. first proposed a duty-free standard linked to investments in Taiwan. While South Korea secured a promise of fair treatment in last year’s trade agreement compared to competing countries, it must now engage in follow-up negotiations with the U.S.
Furthermore, as evidenced by the announcement of a 10% tariff on eight countries, including Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, to counter Greenland’s annexation, the trend of wielding tariffs as a policy tool is expected to continue for the foreseeable future.
Yeo Han Gu, head of South Korea’s Trade Negotiation Office, said during a meeting with reporters in Washington, D.C., that a Supreme Court ruling on the tariffs could come at any time and that expectations are evenly split. He added that what is most important to understand is that the Trump administration remains determined to press ahead with its current tariff policy regardless of the court’s decision.