Trump Threatens New Trade War as Court Weighs Whether to Check Him

The Supreme Court could soon curtail President Trump’s ability to swiftly impose tariffs on allies and adversaries around the globe.

But that hasn’t slowed down Mr. Trump, who has issued a series of new, belligerent threats against European countries in recent days that have risked touching off another trade war with some of America’s closest allies.

Speaking to reporters on Monday, Mr. Trump casually threatened a 200 percent tariff on French wine and Champagne, unless Emmanuel Macron, the president of France, chose to join a “board of peace” Mr. Trump set up last year for Gaza.

“I’ll put a 200 percent tariff on his wines and Champagnes, and he’ll join, but he doesn’t have to join,” Mr. Trump told reporters.

The threat came shortly after Mr. Trump said that eight European countries would be hit with escalating tariffs unless they agreed to sell the Danish territory of Greenland to the United States. The regional bloc has staunchly resisted that demand, describing it as destabilizing for global peace, as some countries have started to explore retaliatory measures.

Legal experts said that Mr. Trump would most likely issue the new tariffs using the same emergency law that he has used to target imports from nearly every country during his second term. That law, the International Emergency Economic Powers Act, is under scrutiny at the Supreme Court, after small businesses and states sued on grounds that Mr. Trump had overstepped his authorities to tax imports from nearly every U.S. trading partner.

But Mr. Trump on Tuesday appeared unfazed by the prospect of an adverse ruling that would undercut his trade strategy. At a lengthy press briefing to commemorate the first year of his second term, the president instead maintained he would simply “use something else” to try to punish other countries using tariffs.

“What we’re doing now is the best, the strongest, the fastest, the easiest, the least complicated,” Mr. Trump said.

By midday Tuesday, Mr. Trump’s renewed set of ultimatums appeared to trouble financial markets around the world, as investors braced for the possibility of a trans-Atlantic, tit-for-tat dispute that could harm both sides.

Yields on U.S. bonds spiked, the S&P 500 dropped over 2 percent and the Vix volatility index, known as Wall Street’s fear gauge, rose to its highest level since November, even as Mr. Trump and his aides insisted that the markets remained robust. The tumult was reminiscent of the early days of the president’s trade war, which similarly touched off global panic.

Much as before, the administration largely shrugged off the turbulence.

Scott Bessent, the Treasury secretary, attributed the market gyrations earlier Tuesday to hiccups in the Japanese bond market. Speaking at the World Economic Forum in Davos, Switzerland, Mr. Bessent told European leaders to “sit back, take a deep breath, do not retaliate” and await Mr. Trump’s arrival at Davos this week.

If Mr. Trump proceeds with his tariffs — and Europe responds — growth in U.S. economic output could fall by half a percentage point next year, according to a report released Monday by Oxford Economics. Some experts questioned whether the president’s threats might ever achieve their intended result, too.

“Tariffs are typically not a great tool for getting governments to do what you want, but they’re particularly ill suited for something like this, where you already have tariffs in place,” said Scott Lincicome, the vice president of general economics at the Cato Institute.

He added: “It beggars belief that a 10 percent tax that’s mainly borne by Americans is going to somehow cause all of Europe to cave on something as serious as this.”

Some analysts described Mr. Trump’s threat of tariffs over Greenland as his most outlandish and unconventional use of his emergency powers. But the president has relied on the law known as IEEPA to impose tariffs for a variety of reasons, with some of the goals outside the orbit of trade, such as stopping inflows of illegal drugs and addressing other international situations.

Jennifer A. Hillman, a professor at Georgetown University Law Center, said that Mr. Trump had abused the law to declare “anything he wants” — from Brazil’s prosecution of Jair Bolsonaro, a political ally of Mr. Trump’s, to the president’s desire to take over Greenland — “to somehow be an unusual and extraordinary threat to U.S. security.”

“He is attempting to turn a limited sanctions statute into a broad mandate to do anything,” Ms. Hillman said.

She added that she did not know if or when the justices had made up their mind about the legality of the president’s policies, but that she believed Mr. Trump’s latest actions would “reinforce the need for the court to step in and declare that IEEPA cannot be used in this way.”

On Tuesday, Mr. Trump still described the tariffs he had put in place as a “perfect system,” and expressed his hope that the Supreme Court would do the “right thing for our country” by declaring his expansive duties to be legal. Otherwise, the president told reporters, his remaining trade powers would be more “cumbersome” to wield.

The court could decide to revoke some or all of those tariffs — or it could decide to allow the president’s approach. Mr. Trump could then impose steep duties by other means — and his aides have indicated they are exploring options to do so — but none would allow the president to raise or lower tariffs so flexibly.

Ryan Majerus, a partner at King and Spalding, said he would be “surprised” if the Supreme Court held that the emergency law could never authorize tariffs.

“I think the administration believes it will retain the authority to use this law at least in some situations dovetailing with national security interests,” Mr. Majerus said.