POLITICAL BRIEFING — Donnerstag, 28. Mai 2026

⏱️ 9 min read

The Dashboard

THEME: Trump's tariffs were struck down by a court — but the EU's trade strategy is still paralysed.

DASHBOARD:
🔴 THREAT The US Court of International Trade invalidated all Section 122 tariffs on 7 May 2026, yet Trump has not removed them; customs collections continue while appeals drag on (White & Case, 13 May 2026)
🟡 WATCH The EU suspended Turnberry ratification after the Supreme Court ruling; Brussels now faces a tariff regime that is simultaneously illegal, enforced, and unpredictable (Bruegel, 24 February 2026)
🟢 GOOD The Court of International Trade ordered refunds for tariff payments; EU exporters may eventually recover billions paid under an invalid regime (Gibson Dunn, 13 May 2026)
🔴 RISK Trump previews Section 301 investigations targeting EU digital regulation and pharmaceutical pricing; these would fall outside the Turnberry framework and trigger the EU's Anti-Coercion Instrument (Bruegel, 24 February 2026)

KEY DATA: EUR/USD: 1.1637 (ECB ref, 27 May) | Brent: ~$96.28 (27 May) | Bund 10Y: 2.99% (27 May) | DAX: 25,324.81 (27 May)

The Story

Why Now

On 7 May 2026, the US Court of International Trade (CIT) issued a sweeping opinion: the 10% global tariff surcharge Trump imposed under Section 122 of the Trade Act was unlawful. The court found the administration had failed to meet the statutory requirements — no IMF determination of balance-of-payments distress, no meaningful justification, no lawful process. It ordered the government to halt collections and refund payments. Three weeks later, the tariffs are still being collected. The Trump administration is appealing. EU exporters are still paying duties on goods that entered the United States under a regime a federal court has declared invalid.

The timing is acute because the EU's entire trade strategy rests on a foundation that no longer exists in law. The Turnberry framework agreement of August 2025 — negotiated when Trump's original IEEPA tariffs were in force — assumed a 15% maximum tariff ceiling. Bruegel's analysis, published 24 February after the Supreme Court first clipped Trump's IEEPA powers, warned that the Section 122 surcharge would breach Turnberry because it applied a blanket 10–15% duty on products the agreement was supposed to cap. Now the CIT has struck down Section 122 itself. The legal architecture of Trump's tariff regime has collapsed twice — first IEEPA, then Section 122 — and yet the duties remain in place.

For Europe, this creates a paradox. The EU cannot negotiate with a tariff regime that may not exist in six months. But it also cannot retaliate against a regime a US court has already invalidated. Brussels is trapped between Trump's defiance of judicial authority and the institutional reality that tariff collection continues regardless.

The Actors

Donald Trump: The president's reaction to the Supreme Court's February ruling was characteristically confrontational. Rather than comply, he pivoted to Section 122 — a statute designed for temporary balance-of-payments emergencies, not structural trade policy. When the CIT struck that down too, the administration announced it would appeal and continue collecting duties. Trump has also previewed Section 301 investigations targeting EU digital services taxes, pharmaceutical pricing practices, and "discrimination against US technology companies." These investigations, if they result in tariffs, would fall outside the Turnberry agreement entirely and represent a new front in the trade war. As Bruegel notes, US Trade Representative Jamieson Grier has made clear the administration plans to "respect different agreements" concluded under IEEPA — but the practical meaning of that commitment is unclear when the legal basis for those agreements has been erased.

The European Commission: Brussels has not been passive. The European Parliament suspended Turnberry ratification after the February Supreme Court ruling. The Commission prepared retaliatory measures on €93 billion of US imports — levies that had been suspended under Turnberry but can be reactivated if the US breaches the agreement. Bruegel's 24 February analysis argues the EU should deploy its Anti-Coercion Instrument (ACI, Regulation 2023/2675) if Section 301 investigations materialise. The ACI covers trade in goods, services, foreign direct investment, financial markets, public procurement, and intellectual property — a broader toolkit than traditional tariff retaliation. But the Commission has held back, waiting to see whether the CIT ruling survives appeal and whether Trump finds yet another legal statute to replace the two courts have invalidated.

The European Parliament: The Parliament's decision to suspend Turnberry ratification was a direct response to the Supreme Court ruling. MEPs were not willing to endorse a framework agreement when the tariff regime it was supposed to constrain had already been declared illegal by the highest court in the United States. The suspension gives Brussels leverage — it can restore ratification if the US settles on a lawful tariff policy, or walk away if Trump escalates through Section 301 or other authorities.

US Federal Courts: The judiciary has emerged as an unexpected actor in trade policy. The Supreme Court's 6–3 ruling in February was narrow — it struck down IEEPA tariffs only, leaving other authorities intact. But the CIT's May 7 ruling went further, invalidating the replacement regime under Section 122. As White & Case noted in its 13 May client alert, the CIT opinion "raises fundamental questions about the administration's authority to impose tariffs going forward." The appeals process will take months. But the legal trend is clear: courts are reasserting congressional authority over trade policy after decades of executive expansion.

The Stakes

The immediate stakes are financial. EU exports to the US in sectors covered by Section 122 — machinery, chemicals, consumer goods, agricultural products — run into the hundreds of billions of euros annually. The 10% surcharge, now declared invalid, has already been paid on months of shipments. The CIT ordered refunds, but the appeals process could delay repayment for a year or more. In the interim, EU companies face cash flow pressure, contract uncertainty, and the risk that any eventual refunds will be offset by new tariffs imposed under a different legal authority.

The institutional stakes are larger. The EU's Anti-Coercion Instrument was designed for exactly this scenario: a major trading partner using economic measures to extract political concessions. If Trump launches Section 301 investigations targeting EU digital regulation — the Digital Markets Act, the AI Act, data protection rules — the ACI becomes the EU's primary defence. Bruegel's analysis warns that these areas touch "critical areas of EU sovereignty" and that US tariffs in response to such practices "would both breach Turnberry and amount to coercion."

The strategic stakes are existential for the transatlantic relationship. ECFR's analysis, published earlier this year, argues the EU should negotiate Trump's tariffs in three phases — short-term (90 days), mid-term (90 weeks), and long-term (90 months). But the CIT ruling has scrambled even that phased approach. The EU cannot negotiate with a tariff policy that courts invalidate faster than diplomats can draft communiqués. As ECFR warned, the Trump administration "does not seem to believe it must make any kind of offer" to secure European cooperation, and its "power-drunk vision... does not bode well for deal-making."

The Context

Background

The current trade war began in earnest in April 2025, when Trump announced sweeping "reciprocal tariffs" on all US trading partners. The EU initially retaliated with counter-tariffs, then negotiated the Turnberry framework in August 2025. The agreement established a 15% maximum tariff on most EU exports to the US, with sectoral exceptions for steel, aluminium, and autos at 25%.

The constitutional crisis in US trade policy deepened on 20 February 2026, when the Supreme Court ruled 6–3 that Trump lacked authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The ruling was a landmark affirmation of congressional authority over trade, but it left most existing tariffs intact because they had been imposed under alternative authorities. Trump responded by shifting to Section 122, a statute authorising temporary import surcharges in cases of "significant balance-of-payments problems." The White House imposed a 10% surcharge on most imports, later raised to 15%, claiming the US reserve position justified emergency measures.

The CIT's May 7 ruling found the administration had not met Section 122's statutory requirements. There was no IMF determination of balance-of-payments distress. The surcharge was not "temporary" — it had no expiration date tied to an actual payments crisis. The court held the tariffs unlawful and ordered refunds. The administration appealed. Collections continue.

The Bigger Picture

This is not merely a trade dispute. It is a constitutional stress test for the United States and a strategic inflection point for Europe.

The US constitutional dimension is unprecedented. For the first time since the 1930s, federal courts are systematically striking down a president's tariff policy. The Supreme Court ruled in February. The Court of International Trade ruled in May. If the appeals courts uphold these decisions, Trump's tariff regime collapses — but the political reaction could include legislation to expand presidential trade powers or, conversely, a constitutional standoff if Trump defies judicial orders. The Council on Foreign Relations warned in February that the Supreme Court ruling "opens new fights over tariff refunds, other tariff authorities, and trade-deal continuity." Those fights are now underway.

For Europe, the bigger picture is geoeconomic. The EU has spent decades building a rules-based trade order — the WTO, bilateral agreements, regulatory cooperation. That order assumed the United States would remain a partner in upholding it. Trump's tariffs, and his willingness to defy courts to maintain them, signal that assumption is no longer valid. ECFR's analysis argues Europe must prepare for "a world in which they cannot bargain away the problems with the US and instead retaliate decisively, redirecting their resources towards fiscal expansion, single-market integration and trade diversification."

The single-market dimension is critical. If the EU cannot rely on the US as a stable trading partner, the internal market becomes more valuable — and more urgent. Bruegel has consistently argued that European economic resilience depends on deepening the single market, particularly in digital services, energy, and defence procurement. A permanently adversarial transatlantic trade relationship would accelerate that agenda, but only if EU member states can overcome their chronic disagreements on fiscal policy, industrial strategy, and enlargement.

The global dimension matters too. CSIS's analysis of Trump's trade strategy notes that the administration has successfully avoided widespread retaliation through "escalation dominance" — convincing partners that entering a cycle of retaliation would be more costly for them than for the US. But that dominance depends on credibility. If US courts keep striking down Trump's tariffs, and if the EU eventually deploys the ACI or reactivates its €93 billion retaliatory package, escalation dominance erodes. Other trading partners — Japan, South Korea, Vietnam — are watching. If Europe holds firm, they may too.

Datenvertrauen

Legende:

• ✅ Ja — Gegen primäre Quelle verifiziert (EZB-Website, Marktclose, Gerichtsentscheidung)
• ⚠️ Quelle zitiert — Von Think Tank genannt, nicht unabhängig geprüft
• ❌ Inferiert — Eigene Schlussfolgerung, nicht verifiziert

The Data

Market Impact

European markets have treated the CIT ruling with remarkable calm. The DAX closed at 25,324.81 on 27 May, essentially flat. German bund yields held steady at 2.99%. The euro edged up to 1.1637 against the dollar. Markets are pricing in two possibilities: either the appeals process restores the tariffs quickly, or their absence is offset by other trade-policy uncertainties.

The sectoral impact is more pronounced. European automotive exporters — already facing 25% Section 232 tariffs that were unaffected by the CIT ruling — saw limited relief. But machinery, chemicals, and consumer goods companies that had been paying the Section 122 surcharge now face a choice: book the payments as recoverable receivables (betting on eventual refunds) or write them off (assuming appeals drag on for years). The uncertainty is itself a cost.

The ECB's June 11 rate decision adds another layer. Markets price an 85% probability of a hike to 2.25% (ECB-Watch.eu, 24 May). If Lagarde tightens into a trade environment where US tariffs are simultaneously illegal, enforced, and unpredictable, the policy mix becomes treacherous. A stronger euro helps importers but hurts exporters facing tariff pressure. Higher rates help inflation control but slow growth just as trade uncertainty suppresses investment.

What's Priced In

Futures markets show limited conviction on trade outcomes. The euro's modest strength against the dollar suggests some investors expect the CIT ruling to survive appeal, reducing tariff risk. But the move is small — 1.1637 is barely changed from levels a month ago. The bund curve is flat, suggesting investors see no clear direction for either rates or issuance. Defence sector equities continue to outperform, indicating the market still expects European rearmament regardless of trade developments.

The options market tells a more nuanced story. Implied volatility on EUR/USD has risen modestly since the CIT ruling, suggesting traders expect currency turbulence if the appeals process produces conflicting decisions from different federal circuits. A Supreme Court ruling on Section 122 — which could come in 2027 — would be the decisive event. Until then, markets are treading water.

Scenarios

Base Case (55% probability): The appeals process takes 12–18 months. The CIT ruling is stayed pending appeal, so tariff collections continue. The EU holds back from deploying the ACI or reactivating retaliatory levies, preferring to wait for legal clarity. Turnberry remains suspended. US-EU trade relations stagnate in a "no deal, no war" equilibrium. European exporters absorb continued uncertainty. The euro trades in a 1.15–1.18 range. No Section 301 tariffs materialise before 2027.

Upside Case (25% probability): The appeals court upholds the CIT ruling before year-end. The Supreme Court declines review. Trump, facing a second judicial defeat, pivots to negotiation rather than finding a third legal statute. The EU restores Turnberry ratification in exchange for formal tariff elimination. US-EU trade returns to a stable, if not friendly, baseline. The euro strengthens toward 1.20. European equities rally on reduced uncertainty.

Downside Case (20% probability): The appeals court overturns the CIT ruling, restoring Section 122. Trump launches Section 301 investigations targeting EU digital regulation and pharmaceutical pricing. The EU deploys the Anti-Coercion Instrument, triggering a full-scale trade war covering goods, services, investment, and intellectual property. The transatlantic relationship fractures. European markets sell off. The euro weakens below 1.10. Global trade volumes contract.

The Trigger

The specific event that would flip the probabilities: an appeals court ruling on Section 122. If the Federal Circuit upholds the CIT, the tariff regime collapses and the Upside Case gains probability. If the Federal Circuit reverses, the Downside Case gains probability because Trump will have judicial cover to escalate through Section 301 and other authorities. A ruling is expected in late 2026 or early 2027.

The Question

If US courts keep striking down Trump's tariffs but the administration keeps collecting them, is the rule of law still a reliable foundation for trade policy — or does Europe need to build its economic defences assuming the US judiciary cannot constrain its own government?

Watch For

• Federal Circuit ruling on Section 122 appeal, expected Q4 2026 — upholding the CIT ruling collapses the tariff regime; reversing it emboldens escalation • Section 301 investigations launch — Grier has previewed targets in digital regulation and pharmaceuticals; any announcement triggers ACI consideration • EU Commission decision on Anti-Coercion Instrument deployment — currently on hold, but a Section 301 launch would force Brussels' hand • ECB Governing Council decision, 11 June 2026 — rate hike would tighten conditions just as trade uncertainty peaks • Turnberry ratification vote in European Parliament — suspended since February; a CIT ruling survival could restore momentum

Sources

Think Tanks: • Bruegel — "An EU strategy in the wake of the United States Supreme Court tariffs ruling", 24 February 2026 • Bruegel — "Trump's tariffs need a strategic response from the EU and others", February 2026 • ECFR — "Cards on the table: Why the EU should negotiate Trump's tariffs in three phases", 2025 • ECFR — "What went wrong in Europe's trade gamble with Trump", 2026 • CSIS — "Trump's Trade Strategy Takes Shape After August 1 Tariff Moves", August 2025 (revised) • CFR — "The Supreme Court Clipped Trump's Tariff Powers — and Opened New Trade Battlefronts", 21 February 2026

Official Sources: • ECB — Euro Foreign Exchange Reference Rates, 27 May 2026 • ECB — Monetary Policy Statement, 30 April 2026 • US Court of International Trade — Section 122 ruling, 7 May 2026 • White House — Presidential Action: Imposing a Temporary Import Surcharge, 24 February 2026

News Wires: • White & Case — "Court of International Trade Finds Section 122 Tariffs Unauthorized", 13 May 2026 • Gibson Dunn — "Section 122 Global Tariffs Invalidated by the Court of International Trade", 13 May 2026 • CNN — "February 20, 2026 — Trump administration news, SCOTUS tariffs ruling", 20 February 2026 • The Guardian — "The supreme court's tariffs ruling puts Trump on notice with a bloody nose", 21 February 2026 • Euronews — "EU adopts retaliatory hit list in response to US tariffs", 24 July 2025

Generated: 2026-05-28 04:00 AM Europe/Berlin