The fallout of Trump’s tariff setback at the Supreme Court

0:03Good morning from the Financial Times. Today is Monday, February 23rd, and this is your FT News Briefing. The U.S. Supreme Court has forced President Donald Trump to rethink his tariff regime. We'll look at how it's going down with global trade partners and American voters. Plus, the State of the Union is tomorrow, but today, J.P. Morgan's boss is giving a little State of the Bank update to investors. What can we expect? He likes to use this kind of stage to talk about everything and anything under the sun. It's kind of Jamie Dimon unplugged a little bit. I'm Victoria Craig, and here's the news you need to start your day.

0:49The Supreme Court's landmark decision to strike down President Donald Trump's use of emergency powers to impose tariffs has left more questions than answers, not just for America's trading partners, but U.S. businesses, too. The Trump administration this weekend replaced levies enacted under the International Emergency Economic Powers Act, or IEPA, with a blanket 15 percent global rate. That is due to go into effect tomorrow. So what do the changes mean for trade deals that have been negotiated with the United States over the past year? For the answer, let's bring in Peter Foster. He's the FT's World Trade Editor.

1:26Hi, Peter. Hi. So IEPA-based tariffs are now gone, but that was only a portion of the Trump administration's overall tariff regime. What is still in place?

1:38Sebastian Payne: A lot of the tariffs on important things like automobiles and steel and aluminium and silicon chips were imposed under different trade legislation, and those tariffs still stand. So a country like Japan or South Korea or the EU, which is heavily reliant on autos and steel, for example, will be more exposed to those tariffs than a country, say, like Vietnam or Indonesia, that exports sort of more general goods, which would have fallen under the IEPA. But broadly, though, a lot of countries are going to get a haircut as a result of the 15%. So a lot of those Asian countries, the exporting powerhouses, they were in the sort of 18 to 20 % range once they'd done their deal with Trump.

2:19Sebastian Payne: And obviously, 15 % comes down. I think he wanted to narrow that differential between the old deal and the new deal to try and avoid a rush of countries sending goods to the US to sort of take advantage of the lower tariff. Now, you mentioned the European Union. The bloc recently struck a trade deal with the United States, but that has not been implemented yet. Is that deal at risk of being derailed under this new tariff regime? I think it's unlikely it's going to be derailed. It's true that the European Parliament didn't like the deal that the European Union struck with Trump. 15 % tariffs broadly and reductions on autos and 50 % still on steel.

3:00Sebastian Payne: the problem they have is that most experts that I've spoken to have said that if the EU tries to renegotiate or slow pedal the deal then they'll come up against the same retaliation threat that forced them to do the deal in the first place. Trump might increase tariffs for example on automobiles which is a really important export for the EU. So the other factor in the mix here of course, is Ukraine. Part of what drove the decision to cut a deal with Trump was a fear that Trump would remove his security guarantees from Ukraine. And of course, at the moment, Washington's trying to broker a peace deal between Moscow and Kiev.

3:41Sebastian Payne: So that's another area where the EU know from experience they need to not upset Trump. Is that threat of retaliation going to prevent many countries from wanting to renegotiate that and also perhaps that maybe now their tariff rates are lower, as you pointed out earlier. Yes, indeed. And that's why I think most of the trade lawyers and international analysts that I've spoken to are pretty confident that, by and large, these deals are going to stand. India is one interesting one to look at. India did this deal with Trump. It cut the tariffs to 15%. Trump has said there will be no change. But I think some analysts can see that India, which didn't really like the deal, might try and soft walk its deal and see if there's a legal challenge, for example, in the United States or a change of political weather after the midterms.

4:32Sebastian Payne: But broadly, I think the deals will hold. Tariffs are here to stay. Peter Foster, the FT's World Trade Editor. Thanks so much for your time. My pleasure.

4:48So that's the view from abroad, but what about here at home? America brought in more than$130 billion in revenue over the past year from those tariffs imposed under IEPA. But now that the levies have been ruled unconstitutional, U.S. companies want a refund for the duties they have paid. Miles McCormick, our U.S. economics correspondent, is here to walk us through that process. Hi, Miles. Hey, Victoria. So what is the latest on this refunds chatter? Is it likely to happen? So in short, yes, it's likely to happen. But how and over what time frame is far less clear. Trump and his Treasury Secretary, Scott Besant, on Sunday was saying that it's totally up to the lower courts now to decide how this thrashes out.

5:37because, of course, the Supreme Court didn't actually delineate how expected refunds to be done. So for all the businesses lining up and that there's plenty of them big and small for refunds of tariffs, the bad news is probably that they won't be getting that money back in their bank accounts anytime soon. So potentially bad news for those businesses, but also for the U.S. government, right? Because the money, as we pointed out, has been substantial that the government has brought in from these tariffs. And in part, that was going to help reduce the nation's debt pile, which was a campaign pledged by President Trump back in 2024.

6:14What happens to that part of this equation now? Yeah, so this is a really interesting element of it because the administration was using the revenue it intended to get from tariffs over the coming years to justify some of its other fiscal measures. I've seen estimates that the Congressional Budget Office says it was supposed to bring in$3 trillion over the coming decade. And that was supposed to fill some of this hole to offset some of the massive spending that the Trump administration is bringing in, especially under its one big, beautiful act last year. So in the near term, there's a risk that this kind of blows that debt hole wide open.

7:00The issue of affordability is going to be front and center for voters across America. And these tariffs have helped push prices for everyday goods and services higher. So how is the Supreme Court decision likely to go down with voters now? I've seen some analysts say that in some ways, perhaps this could be a good thing for the administration because it kind of takes it out of its hands and means that tariffs have to come down and that could have a deflationary effect on some goods without it having to have actually backed down in any way itself. There were reports recently, one in particular by the New York Federal Reserve, said that about 90 % of the tariff burden over the past year was being placed on Americans.

7:45As we move towards November and the midterm elections, the president has kind of entered campaign mode. Different polling that's come out recently shows people are connecting the tariffs with higher prices, which means that what has become the president's biggest electoral liability, i.e. affordability, could remain just that. Really interesting times ahead. Miles McCormick, our U.S. economics correspondent. Thanks so much for your time. Thanks, Victoria.

8:19Trust me, those are two little words that can spark fear in the heart of anyone on the receiving end. But it's reassurance that Jamie Dimon, the boss of America's biggest bank, has given investors as he embarks on a plan to spend a record$2 billion a week this year. But what's he using all that cash for and are shareholders on board? Our U.S. banking editor Josh Franklin will find out at the bank's annual investor update this afternoon. But first, he joins me to talk about those big spending plans from J.P. Morgan's CEO. Hi, Josh. Hi there. So$2 billion a week, I can't even comprehend what that looks like.

8:58What do we know about this spending spree that Jamie Dimon wants to go on? So I think they've given quite a lot of high-level detail about what these spending plans are. So they've talked about this is going towards hiring more people, hiring bankers, building bank branches, which is still quite a big thing in the United States. Obviously, spending on technology, things like AI, marketing. In order to get people to take out new JPMorgan Chase credit cards, you need to send them all flyers and the post and things. real estate costs. So there's a lot of money to be spent. I think the question investors have is, okay, you're doing all of these things.

9:31Is this actually going to be good for business? And how do we know whether or not this is going to actually generate a good return on the investment that you're making? And so this was the number that Diamond floated last month on the bank's earnings call. But what has made JP Morgan so flush with cash? I think the answer to that question, how can you spend$2 billion a week, is if you're making a billion dollars a week in profits. So JP Morgan has this dominant position in the United States banking landscape, hugely profitable already. And Jamie Dimon will tell you that's because they've been making all these investments over the last 20 years, not skimping and scraping, plowing money back into the business, and that has allowed them to be so profitable.

10:122025 was definitely a good year for the banking industry as a whole. There was almost$300 billion collectively across 4 ,300 or so U.S. banks, which is a record amount. But Mike Mayo, who's one of the kind of most outspoken banking research analysis, he talks about the Goliath as winning strategy. So big is better in banking. And he describes J.P. Morgan as the Goliath of Goliaths. So they really are kind of heads and shoulders size-wise above everyone else. What I think is so interesting about this is that Jamie Dimon's quest to spend this money seems to be really rooted in determination not to be left behind as fintechs and other startups in the industry kind of threaten traditional banking.

10:50How big of a problem is that threat for J.P. Morgan? You're absolutely right. That's the big thing Jamie Dimon says, you know, he's focused on. He's not just focused on what Bank of America and Citigroup and Wells Fargo are doing. He's looking at what Apple is doing in technology, what Walmart is doing in financial services. He's focused on companies like Stripe and Klarna. So he talks about these almost being an existential need for spending on these levels to make sure that J.P. Morgan doesn't get left behind. Okay. So, Josh, you're heading over to J.P. Morgan's flashy new headquarters for the annual meeting this afternoon.

11:24What are you hoping to hear? I think what people will want to get is as much granular detail as possible on the return metrics that they're expecting from some of this stuff. And then I think also people are just wondering on Jamie Dimon's view on the world. He likes to use this kind of stage to talk about everything and anything under the sun. It's kind of Jamie Dimon unplugged a little bit. So we'll get a chance to hear what's top of mind for him. Sounds like a lot of fun. Can't wait to hear what you come back with. Fun, yeah. The FT's U.S. Banking Editor, Josh Franklin. Thanks so much for your time.

11:57Thanks very much. Appreciate it.

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