Trump threatens 'more powerful and obnoxious' tariffs
Donald Trump has announced that he can implement tariffs in a "much more powerful and obnoxious way" than previously applied. On his Truth Social platform, the US president criticized the Supreme Court for ruling against his broad global tariffs last Friday, labeling the justices as "incompetent." He also stated that the court has "accidentally and unwittingly" expanded his presidential powers regarding tariffs.
"The supreme court (will be using lower case letters for a while based on a complete lack of respect!*) of the United States accidentally and unwittingly gave me, as President of the United States, far more powers and strength than I had prior to their ridiculous, dumb, and very internationally divisive ruling.
Trump explained that he can now use licenses to impose "terrible" measures on foreign countries, especially those that have been "ripping us off for many decades," but according to the ruling, he cannot charge a license fee, which he finds illogical. He emphasized that all licenses charge fees and questioned why the United States cannot do the same. He added that the court approved all other tariffs, which can now be used more powerfully and obnoxiously with legal certainty than before.
"Our incompetent supreme court did a great job for the wrong people, and for that they should be ashamed of themselves (but not the Great Three!)."
[This refers to the minority of three justices who supported Trump in the recent ruling.]
The Dow Jones Industrial Average continued to decline, losing 321 points or 0.65% to 49,304 points after nearly half an hour of trading. Nike was among the top decliners, down 3.8%, while Salesforce dropped 4.5% and American Express fell 4.2%.
Stephen Brown, deputy chief North America economist at Capital Economics, noted that while the new temporary 15% tariff means the average US tariff rate has not decreased significantly, several economies including Brazil, China, and other Asian countries are in a better position. However, he cautioned that this may be temporary as the administration plans to initiate Section 301 investigations into potential unfair trade practices, which could lead to further tariff increases.
EU postpones ratification on US trade deal
The European Parliament has decided to pause the ratification process of the US trade deal agreed with Donald Trump last July in Scotland. A vote scheduled for the following morning in the Trade Committee was postponed.
Anna Cavazzini, trade policy spokesperson for the Greens/EFA group, stated: "Given the current enormous uncertainty, a vote would be unjustifiable. The new tariffs on EU exports are over 15 percent, thus violating the deal. At the same time, Trump continues to blithely announce arbitrary tariffs. This lack of trust prevents simply rubber-stamping the implementation of the US deal now."
"The top priority must be finding a solution for the remaining 50% tariffs on steel, aluminum, and related products. The ball is now in the US’s court. Tariffs are extremely unpopular and have not led to the industrial jobs promised by Trump."
Nike and Gap shares hit by tariffs
Shares of US importers declined in early trading as investors assessed the impact of the new 15% global tariff announced by Donald Trump on Saturday. Nike shares fell 1.8%, while Gap declined 3%.
Wall Street opened lower in response to Trump's new tariff and his threat of additional "powerful and obnoxious" tariffs. The Dow Jones Industrial Average dropped 144 points or 0.3% at the start of trading to 49,481 points. The broader S&P 500 and the tech-focused Nasdaq both decreased by 0.07%.
Manufacturers seek urgent clarity over tariff situation
Uncertainty regarding whether the UK will be subject to Trump's new 15% tariff is particularly concerning for British manufacturers who have already shipped goods to the US. Richard Rumbelow, director of international business at Make UK, emphasized the urgent need for clarity.
"Many UK exporters will be concerned at the further prospect of trade disruption to goods entering the US market. Stability, certainty and clarity are key cornerstones for global trade policy and for UK businesses who plan, invest and conduct trade with partners across the global economy, and particularly with customers in the United States. It’s now important UK exporters work with their US importers to maintain their trading relationships by working through customs guidance as it emerges."
"Given many companies will have goods at sea clarity is now urgently required on how UK exports will be treated on arrival into the United States, with the imperative being to protect the benefits of the bi-lateral trade framework that was concluded with the United States last year. It is vital Government continues to seek gradual reductions in tariffs and other opportunities and seeks a strengthening of trade relations from the current position."
Bank of England policymaker on AI and unemployment
Alan Taylor, a member of the Bank of England's Monetary Policy Committee (MPC), suggested that artificial intelligence is unlikely to cause long-term unemployment in the UK. Speaking at a Deutsche Bank event in London, Taylor remarked:
"History is full of people saying ‘This new technology is going to lead to unemployment.’ And yet, over the course of history, unemployment has always returned to its normal level."
"There are changes in the composition of the labour force but we haven’t yet seen that kind of structural shift, which is not to say it can’t happen, but we haven’t seen it yet."
Taylor, who was one of four MPC members to vote for an interest rate cut this month, noted that the rise in youth unemployment to an 11-year high in January (excluding Covid effects) is cyclical and unlikely to persist.
"It always goes up in cyclical ways. When the economy weakens and when unemployment is rising, usually youth unemployment rises faster. That’s true across the world. So for me, it’s mostly cyclical. I believe that as the economy normalises, that will start to normalise again."
He reiterated that inflation is returning to the Bank’s 2% target faster than expected, with wage growth slowing. "Things are normalising at a pretty healthy clip," he said, indicating he may vote for further rate cuts at the next MPC meeting in March.
Taylor suggested the MPC could implement two to three more interest rate reductions to restore economic normality but expressed concern that services inflation has not declined as rapidly as anticipated. Services inflation slowed to 4.4% in January from 4.5%, below the Bank’s forecast of 4.1%.
"I’m looking for services price inflation to continue to normalise along with wages as the year unfolds," Taylor added.
In Europe, Germany’s stock market remains pressured by trade war uncertainty, with the DAX down 0.4%. Other markets showed gains, such as Italy’s FTSE MIB, which rose 1%.
Yen's purchasing power hits 53-year low
While much attention is given to the US dollar's trajectory, senior economics writer Phillip Inman highlights the yen's declining purchasing power. Japanese media reported that data from the Bank of International Settlements (BIS) indicates the yen’s purchasing power has dropped to its lowest level since 1973, the era of fixed currencies.
This depreciation has allowed Japan, the world’s third-largest economy, to maintain its status as a major manufacturing exporter despite competition from China, Vietnam, and Taiwan. This has been achieved not through increased productivity but by consistently devaluing the currency to make exports cheaper.
The BIS figures, published last Friday, show a fall in the real effective exchange rate, which peaked at 193.95 in April 1995. According to Nikkei Asia, the current rate is roughly one-third of that peak, reflecting weakening against currencies including the US dollar, euro, Chinese yuan, and Thai baht.
The prolonged economic stagnation known as Japan’s “lost decades,” following the bubble economy collapse, is a major factor. The Bank of Japan has maintained ultra-low interest rates relative to other major economies, encouraging investors to hold assets in currencies other than the yen.
This situation causes domestic challenges, such as more expensive imports and costlier foreign travel. However, the low yen supports exporters by enhancing competitiveness, enabling them to generate profits to pay staff and reward shareholders.
During her brief tenure as prime minister, Sanae Takaichi, whose party won a historic landslide in a recent lower house election, has seen the yen weaken further, likely in response to her plans for increased government spending funded largely by borrowing.
She may face public criticism for rising domestic prices before addressing issues like low foreign investment, which would typically benefit from a weak currency.
Donald Trump has expressed a desire for the yen to appreciate, which would make the dollar cheaper and boost US exports. The Bank of Japan has indicated plans to raise interest rates to make the yen more attractive to investors and increase its value. However, many Japanese economists are concerned about the impact on small and medium-sized businesses that rely on cheap debt after four decades of ultra-low borrowing costs.
UK does not expect new Trump tariff to impact its US deal, PM spokesman says
In Westminster, Prime Minister Keir Starmer’s spokesman stated that the UK does not anticipate that President Trump’s new 15% global tariff will affect the majority of the UK-US economic agreement. The spokesman noted that Britain’s trade minister, Peter Kyle, has been in contact with US Trade Representative Jamieson Greer, and discussions between British and US officials are expected to continue throughout the week, according to .
Bank of England's Taylor: high US tariffs appear to be here to stay
Bank of England policymaker Alan Taylor warned that elevated US import tariffs seem likely to persist. He indicated that the full effects may take "many years" to materialize.
"I think the fundamental thing to realise is those tariffs are here to stay at some kind of number that is a lot – an order of magnitude - bigger than it was two years ago.
So I think we should expect this shock to play out also over many years."
Adding to the uncertainty, questions remain about the legality of the new 15% tariffs. Trump is invoking Section 122 of the Trade Act of 1974, which allows the president to impose surcharges and import restrictions to address international payments issues.
However, some experts question how the US can have balance-of-payments problems in an era of floating exchange rates.
Gita Gopinath, former first deputy managing director of the International Monetary Fund, stated: "Wearing my (former) IMF hat I will say that the US does not have a fundamental international payments problem.
A balance of payments (BoP) problem arises when a country loses market access or is close to losing market access. As long as there is plenty of demand for US debt and equities, which is the case, the US does not have a 'payments' problem. It can finance its trade deficits…"
Atakan Bakiskan, economist at Berenberg, commented on the issue:
"Are the new tariffs even legal? The new Section 122 tariffs may also face court challenges, as the current US trade deficit may not meet the condition of “large and serious balance-of-payments” deficits that grant the president authority to impose tariffs to address “fundamental international payments problems.”
First of all, isn’t the balance of payments always equal to zero as an accounting identity under a flexible exchange rate regime? Second, what qualifies as “large and serious”? No president has ever invoked Section 122 before, so any legal challenge will likely take time to resolve."
EU seeking 'additional clarity' from US over tariffs
The European Union has requested "additional clarity" from the US regarding whether the tariff agreement reached last July in Scotland remains valid following Trump's announcement of a new 15% global tariff on Saturday.
EU trade spokesman Olof Gill stated: "We are very clear what needs to happen here. The US needs to tell us precisely what is going on. Our intention is to continue implementing the aspects of the agreement we made with the US."
"Additional clarity is required. And I think it’s very fair to say that full clarity on what these new developments mean for the EU US trade relationship is the absolute minimum that is required in order for us as the EU to make a clear eyed assessment and decide on next steps."
German Chancellor Friedrich Merz expressed expectations that Trump will honor the tariff deal made last July at his Scottish golf course. Merz’s spokesperson said:
"We expect the US to follow the Supreme Court of the US decision with clear policies."
The EU called on the US to honor the July agreement, stating, "A deal is a deal."
The new 15% tariff rate Trump intends to impose stems from powers under the 1974 Trade Act, a different legal framework than the reciprocal tariffs Trump imposed unilaterally last year on multiple countries. Those previous tariffs can only last 150 days and require congressional approval thereafter.
ING: Asia should benefit from tariff changes
Asia is expected to benefit from the US tariff adjustments, as the Supreme Court's removal of IEEPA tariffs lowers effective tariff rates for key exporters such as India, China, and Vietnam, according to ING analyst Deepali Bhargava.
Bhargava noted that China stands to gain significantly from the elimination of IEEPA tariffs, while the Supreme Court ruling may strengthen India’s negotiating position as it seeks an interim trade deal with the US.
Vietnam could be the region’s biggest beneficiary, as the shift to a flat 15% tariff creates a more favorable production base for goods destined for the US market.
Japan and South Korea are expected to gain little from tariff changes alone, but their strategic trade and investment agreements with the US should continue as planned.
The European Parliament is preparing to pause the ratification process of the trade deal with Donald Trump later in the day, according to the lead negotiator of the conservative group of MEPs. The parliament had previously paused the deal over Trump’s Greenland threat but resumed earlier this month, with a full vote expected in March.
Bernd Lange, chair of the International Trade Committee of the European Parliament, has called an extraordinary meeting on Monday following the Supreme Court ruling that struck down the tariffs as illegal.
Zeljana Zovko, lead trade negotiator for the European People’s Party group on the US deal, told Bloomberg that "we have no other option" but to delay approval to seek clarity on the situation.
How Trump's 15% tariff could disrupt UK supply chains
Dr Jonathan Owens, senior lecturer in operations management and global supply chain expert at the University of Salford, warned that the potential implementation of Trump's 15% global tariff could cause immediate disruptions to UK supply chains.
"If implemented, a 15% tariff policy under Donald Trump could send immediate shockwaves through UK supply chains, despite the measures being imposed by the United States. The UK is tightly woven into global trade networks, and many British firms either export directly to the U.S. or supply critical components that feed into American markets. A sudden cost barrier of this scale would not be contained within U.S. borders and could ripple quickly across the Atlantic."
Owens explained that higher US import costs would likely reduce demand for UK goods, especially in key sectors such as automotive manufacturing, aerospace, machinery, and pharmaceuticals. British suppliers integrated into transatlantic production lines could face order cancellations, production cuts, and excess inventory. Smaller firms with narrow margins might experience cash-flow crises.
"Countries hit by falling U.S. demand may flood European markets with surplus goods, intensifying price competition and squeezing UK manufacturers. At the same time, currency volatility could surge, driving up hedging costs and injecting further unpredictability into procurement and pricing strategies."
He added that logistics networks could be affected as shipping routes are reconfigured to avoid tariffs, potentially causing port congestion, delivery delays, and increased freight costs.
While long-term consequences depend on political negotiations, the immediate effects would include heightened uncertainty, rising costs, and significant supply chain turbulence as UK businesses strive to remain resilient.
However, Owens noted that this might be primarily political theater generating headlines rather than causing lasting economic harm. If the policy is short-lived, disruptions could be sharp but brief.
