Tariff pressures test trade alliances¶
inInternational Shipping News20/08/2026
New analyses from the Peterson Institute for International Economics (PIIE) suggest that the administration’s approach may ultimately weaken both its legal position at home and America’s strategic interests overseas, exposing once again how trade policy can produce consequences far beyond its intended targets.
In a briefing titled Why Trump will lose (again) on the new challenge to his tariffs, PIIE senior research staff Alan Wm. Wolff contends that the administration’s latest tariff measures are likely to face the same fate as previous efforts that were struck down by the courts. According to Wolff, a coalition of 25 US states and a number of affected businesses has challenged tariffs imposed on 60 countries on the grounds that those nations allegedly failed to prevent imports produced with forced labour.
He argues that the legal justification is fundamentally weak and unlikely to withstand scrutiny.
The latest legal challenge follows a series of attempts by the administration to preserve broad-based tariffs after earlier measures were invalidated. Wolff notes that the Supreme Court previously struck down the president’s blanket emergency tariffs, prompting the administration to seek alternative legal routes. After a separate balance-of-payments justification was rejected by the US Court of International Trade, officials turned to Section 301 of the Trade Act of 1974 and framed the tariffs as a response to forced labour concerns.
Wolff is unconvinced by that rationale. He says: “The suit, which was joined by many businesses affected by the tariffs, will succeed for various reasons outlined here.” He further argues that the administration’s reliance on the forced labour argument is “not at all credible.”
Tariff criticism
A key criticism is the scope and uniformity of the measures. The tariffs apply across a broad range of countries despite significant differences in their respective approaches to combating forced labour. Wolff argues that the investigation underpinning the policy was rushed and that countries were effectively treated the same regardless of actual performance.
For manufacturers, importers and retailers, the outcome of the litigation could have significant consequences. The states involved in the case argue that the tariffs increase costs throughout supply chains, affecting both imported goods and domestically produced items that rely on imported inputs.
If the courts again conclude that the executive branch has exceeded its authority, companies could face another period of uncertainty as US trade policy is recalibrated.
While Wolff’s analysis focuses on the domestic legal battle over tariffs, PIIE senior research staff Monica de Bolle’s latest briefing examines how US trade actions are affecting Mercosur, the South American trade bloc comprising Argentina, Brazil, Paraguay and Uruguay.
In Mercosur is at risk from US tariffs and politics, de Bolle argues that one of Latin America’s most important integration projects is coming under strain from both internal political tensions and external pressures. She describes Mercosur as a bloc that has helped increase regional trade and create an integrated industrial base since its establishment through the Treaty of Asunción more than three decades ago.
Despite its economic shortcomings, de Bolle stresses that the bloc remains strategically important. “Mercosur’s survival is critical to member countries’ abilities to negotiate trade deals with the rest of the world,” she writes, warning that escalating tensions between Brazil and Argentina threaten that role.
Strains showing
According to de Bolle, political relations between the bloc’s two largest economies have deteriorated sharply. She highlights a series of diplomatic disputes involving Argentine President Javier Milei and Brazilian President Luiz Inácio Lula da Silva, including disagreements over domestic political matters and public displays of support for political rivals. The result has been a marked decline in bilateral trust at a time when regional co-ordination is increasingly important.
De Bolle argues that US policy has exacerbated these tensions.
She writes that “the combined pressure of politics and tariffs, particularly from President Donald Trump, and the competition for influence from China and the United States pose a potential implosion” for the bloc.
The concern is not just diplomatic. Mercosur has been pursuing new trade relationships and market diversification strategies as countries seek alternatives in a more fragmented global trading environment. Internal division could weaken the bloc’s ability to negotiate from a position of collective strength just as international competition for economic influence intensifies.
Together, the PIIE experts highlight a trade policy agenda generating consequences on multiple fronts. Domestically, the legal foundations of the administration’s tariff strategy continue to be challenged by states, businesses and trade law experts. Internationally, tariff policies are influencing geopolitical relationships and reshaping regional trade dynamics far beyond US borders.
Both Wolff and de Bolle suggest that trade actions intended to advance US economic objectives may ultimately produce unintended consequences. The broader implication for industry is that trade policy is no longer a matter of import duties and customs procedures. It has become deeply intertwined with constitutional questions, diplomatic relationships and geopolitical competition.Source: Baltic Exchange
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