MediaPemalang.com – In February, the United States Supreme Court halted one major policy. Import tariffs previously imposed on dozens of countries were cancelled. The reason is technical but fundamental: the legal foundation used, namely IEEPA, is considered invalid. The ruling shakes the foundations of the Trump administration’s foreign trade policy.
IEEPA, which stands for International Emergency Economic Powers Act, is indeed a law designed for economic emergency situations. The Trump administration used it as a basis for imposing import tariffs on a number of countries. But the Supreme Court thinks differently. The Act was not intended to be a regular rate policy tool.
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The Supreme Court’s decision is not trivial. This is one of the most significant trade policy rollbacks in modern US history. The government lost an important instrument. But Washington did not give up.
Now, the Office of the US Trade Representative (USTR) announced new tariff proposals against 60 countries. This time, the legal foundation is different. The US government is using investigations under Section 301, a more established trade law instrument that has long been a mainstay of American economic foreign policy.
Section 301 authorizes the US Trade Representative to investigate and respond to trade practices deemed unfair. This instrument was used in the US-China trade war several years ago. The legal basis is stronger than IEEPA at least in the trade context, because it was designed for situations like this.
But not all parties agree. The European Commission has stated that this proposal still does not have a strong legal basis. The statement was not just a diplomatic objection. This is about the legitimacy of a policy that impacts 60 countries at once. If Europe is right, these new tariffs could face the same fate as their predecessors.
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The Trump administration argues that these countries have failed to address trafficking in goods resulting from forced labor. This reason was conveyed directly by US Trade Representative Jamieson Greer. According to him, the failure of the US’s most important trading partner to address the influx of goods resulting from forced labor is unacceptable.
Greer added that this situation creates conditions in which American workers are forced to compete globally on an uneven playing field. The statement has a firm tone, and can even be read as a warning to the countries on the list.
The proposed rates are divided into two groups. A total of 15 countries that are considered to have plans or partial schemes are subject to a 10 percent tariff. Indonesia is included, along with Canada, Ecuador, the European Union, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan and the United Kingdom. Meanwhile, 45 countries under investigation under Article 301 are subject to a 12.5 percent tariff, including China, India, Japan, South Korea, Australia and New Zealand.
The legal question remains hanging. Could Section 301 really be the foundation for tariffs of this magnitude against so many countries at once? Is the forced labor argument strong enough to withstand the test of court? The US Supreme Court has already struck down a similar policy once. There’s no guarantee they won’t do it again.
But while the legal process is ongoing, tariffs can still be applied. And for affected countries, including Indonesia which has just enjoyed a reduction in import tariffs to 19 percent, that is what is felt most. Whatever the legal foundation, the impact is real. ***
