President Trump insists trade deal will stand after Supreme Court ruling, but partners aren’t convinced

President Donald Trump defended his tariff policies in his State of the Union address on Tuesday, even though the Supreme Court’s decision invalidating the emergency tariffs caused new disruption to numerous trade deals he has negotiated with global partners.

The court ruled Friday that the president overstepped his authority under the International Emergency Economic Powers Act (IEEPA) by imposing tariffs on goods from nearly every country in the world. President Trump said he would do so again within the confines of the law.

Almost immediately, President Trump replaced it with a 10% tariff under Section 122 of the Trade Act of 1974, which went into effect on Tuesday. He also threatened to raise tariffs under Article 122 to 15%, but it is unclear when they will take effect.

The ruling raises questions about bilateral trade agreements built around IEEPA tariffs and prompts foreign governments to reconsider their positions.

“[Trading partners]made concessions in exchange for certain tariff measures under IEEPA. The legal basis for that no longer exists,” said Johannes Fritz, CEO of the St. Gallen Trade and Prosperity Fund.

“It remains to be seen whether the administration will be able to restructure these agreements under Section 301 and other authorities, but that will likely take time and require new legal processes,” Fritz added.

Section 301 of the Trade Act of 1974 requires the U.S. Trade Representative to conduct formal trade investigations into unfair trade practices before imposing tariffs.

“Countries that struck early deals with the U.S. after last year’s Liberation Day tariffs are, in a sense, left holding the bag,” Saran Sidor, director of the Quincy Institute’s Global South Program, told CNBC’s “Inside India” on Monday.

“Meanwhile, other countries that have resisted acceding to US demands, such as Brazil, may feel a little more vindicated.”

Alicia García Herrero, chief economist for Asia Pacific at Natixis, said countries that did not negotiate tariff cuts could benefit more in the future.

He singled out Japan, which reached an agreement last year to cut mutual tariffs to 15% in exchange for $550 billion in investment commitments.

“They (Japan) are now paying to be treated the same as other countries,” Herrero said, after a court ruling overturned President Trump’s tariff policies.

Japan’s Trade Minister Yoshinari Akazawa said on Tuesday that the 10% universal tariff could impose “additional tariff burdens on some items” and urged the United States not to treat Japan any worse than it was in last year’s trade deal.

In his State of the Union address, President Trump asserted that “nearly every country and business wants to preserve the agreements they already made before the Supreme Court’s unfortunate intervention.”

However, the reality seems to be a little different.

India paused plans to finalize an interim trade deal days before a visit to Washington, D.C. As recently as Tuesday, Indian Minister Piyush Goyal said India would resume negotiations as soon as there was more clarity.

The European Parliament on Monday postponed a second vote on a trade deal that would eliminate European tariffs on many U.S. imports, including industrial goods, while imposing 15% U.S. tariffs on most EU goods.

Bernd Lange, chairman of the European Parliament’s international trade committee, told CNBC on Tuesday that the US had violated the terms of the agreement and the European Union was ready to retaliate if necessary. European officials have expressed concern about the latest levy, suggesting it could threaten a trade deal signed last summer.

EU lawmakers are scheduled to meet again on March 4 to assess whether the US government has clarified its position and commitment to last year’s deal.

French President Emmanuel Macron praised the court’s ruling, saying, “In a democracy, it’s good to have power and the power to counter power.”

Canada also welcomed the ruling, with local leaders in British Columbia and Ontario hailing it as a positive step. Doug Ford, the premier of Canada’s most populous province of Ontario, said Monday that “the walls are closing in” on President Trump and that any deal is better than a bad one.

President Trump has warned countries not to back down from previous agreements, saying countries that want to “play the game” will be subject to much higher tariffs under different trade laws.

Trump also said in a post on Truth Social on Monday that he may impose licensing fees on trading partners. U.S. Trade Representative Jamieson Greer also said the Trump administration plans to launch new Section 301 investigations against several countries, legal actions that could pave the way for new tariffs.

Given President Trump’s more limited tariff threats now, most foreign leaders appear to be in a cautious wait-and-see mode, reconsidering their positions and timing to renegotiate some deal terms.

Mexican President Claudia Sheinbaum said her government would carefully consider the court’s decision and assess its scope and impact.

China’s Ministry of Commerce spokesperson said on Tuesday that China will hold “good faith negotiations” in the next round of bilateral talks during President Trump’s visit scheduled for the end of next month.

Beijing said it would “comprehensively assess” any developments from the United States and decide whether to coordinate countermeasures against reciprocal and fentanyl-related tariffs imposed by the United States.

While foreign governments consider their response, attention is focused on the options remaining to the White House.

With tariffs under IEEPA lifted, the administration is exploring alternative legal means to maintain its trade agenda.

But developing an alternative plan will take time, and the disruption fueled by the tariffs weighing on the global economy could continue.

To date, the Trump administration has negotiated a variety of trade and tariff agreements, frameworks and joint understandings with 18 countries, said Jennifer Hillman, senior fellow for trade and international political economy at the Council on Foreign Relations.

“The tariff situation, and therefore the negotiating position, remains fluid,” Hillman said.

The Trump administration has said it plans to use Section 301 and Section 232 of the Trade Expansion Act of 1962, which allows tariffs to be imposed on imports deemed a national security threat, to impose new tariffs on trading partners.

Hillman noted that changes to existing agreements are likely to be rolled out gradually, and that none of the agreements are completely complete and binding, nor have they been approved by Congress.

—CNBC’s Lim Hui Jie contributed to this report.