In response to Iran’s violent crackdown on protests against the regime, last week President Trump posted on Truth Social that the United States would immediately impose a 25% tariff on all countries doing business with Iran. Such a proposal would have a major impact on countries like China and Brazil, as well as potentially derail the fragile trade agreement between the United States and China, Tehran’s largest trading partner. So far, however, no order has been released, so any applicable terms or authority for such a tariff remain unclear. Moreover, any attempt by the Administration to attribute its authority for these secondary tariffs to IEEPA could be invalidated by the Supreme Court should it issue an opinion to that effect on the original tariffs. The timing of that ruling also remains in limbo.
This past weekend over Truth Social, President Trump announced tariffs on eight European countries (Denmark, Norway, Sweden, France, Germany, The United Kingdom, The Netherlands, and Finland) that have voiced opposition to his stated plans to acquire Greenland. According to his post, while the United States was open to negotiating a resolution, in the meantime a 10% tariff would go into effect on February 1, 2026 and would rise to 25% on June 1 should no deal be reached. These tariffs obviously could disrupt trade deals with the United Kingdom and the European Union, although U.S. Trade Representative Jameson Greer indicated that such tariffs should be considered separate and apart from any deal arrangements.
Yesterday, and in an abrupt about face, President Trump backed off from his tariffs threat, stating that he and NATO Secretary General Mark Rutte “formed the framework of a future deal with respect to Greenland.” As a result of this negotiation, the Administration will not go forward with the punitive tariffs.
None of this back and forth has stopped President Trump from continuing to defend the tariff regime, including in a speech before the Detroit Economic Club and at a Ford facility earlier this month. Administration officials continue to assert that it has a “backup plan” to continue imposing should the IEEPA duties be struck down by the Supreme Court.
Last week the Administration also unveiled a new 25% tariff on the import of semi-conductor chips with the caveat that chips imported to help support bolstering the US technological supply chain would be exempt, although the criteria for meeting this exemption remain unclear. At the same time, the administration announced a new trade deal with Taiwan that reduces the tariff in imports from 32% to 15% in return for a $280 billion investment in the U.S. tech industry. This cut lowers the rate to match that levied on other U.S. trading partners in Asia, including Japan and South Korea. The Department of Commerce also announced exemptions for generic pharmaceutical products and aircraft components from Taiwan.
Meanwhile, on Tuesday the Bureau of Labor Statistics reported that the consumer price index, a key inflation gauge, rose 2.7% in December from 12 months earlier, unchanged from last month and in line with estimates. According to some economists, tariffs levied by the Trump Administration have applied upward pressure on the inflation rate.
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