The USA Supreme Court's rejection of Donald Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose country specific tariffs has generated an explosion of headlines and rabid denunciations from the president himself. But the ruling's economic impact on other countries and world trade is likely to be limited.

The IEEPA tariffs were probably already illegal under World Trade Organization rules, as they violated the principle of equal treatment. In any case, Trump has since imposed a new across-the-board 10 per cent tariff under a different law (Section 122 of the Trade Act of 1974), which he is threatening to raise to 15 per cent (the maximum allowed). Such a response is not good news for American households and firms, but it does bring the US closer to compliance with global trading rules.

In the near term, the new surcharge will create winners and losers. Before the IEEPA ruling, trade-weighted effective tariffs were roughly 36.8 per cent on Chinese exports, 22.3 per cent on India, 21.6 per cent on Vietnam, 23.5 per cent on Indonesia, 19.4 per cent on Thailand, 14.9 per cent on Japan, 12.8 per cent on South Korea, 11.6 per cent on Malaysia, and 6.7 per cent on Singapore. But now, with the new 10 per cent Section 122 tariffs, China's effective rate will fall to about 26.9 per cent, India's to 13.9 per cent, Vietnam's to 16 per cent, Indonesia's to 16.4 per cent, and Thailand's to 14.8 per cent, while Japan and South Korea will face modest increases to 13.5 per cent and 12 per cent, respectively.

Similarly, the European Union and the UK will be worse off than before the court's ruling, because they have made concessions to the US in their bilateral negotiations; but the concession from the US is in fact smaller than the removal of the IEEPA tariffs itself.