"Scrapping US Trade Deals Is Not Realistic"... Experts Call Tariff Reversal a Short-Term Boon, Long-Term Burden

Input: 2026-02-21 05:58:03

Updated: 2026-02-21 05:58:03

New York – Financial News correspondent Lee Byung-chul reports."In reality, walking away from the recent agreements reached with the United States is not being considered as an option. Everyone understands very well that such a move could further damage relations with the White House."

Wendy Cutler, vice president at the Asia Society Policy Institute (ASPI) and a former deputy at the Office of the United States Trade Representative (USTR), offered this assessment on the 20th (local time) after the Supreme Court of the United States (SCOTUS) struck down the Trump administration’s tariff measures.

SCOTUS ruled that the broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded the president’s legal authority.

Cutler noted, "From now on, Washington will have no choice but to rely on provisions such as Section 301, Section 232 and Section 122, where Congress has clearly delegated tariff authority."

She added, "Major trading partners have already entered talks on the assumption that the US will keep tariffs in place by using other statutes."

US President Donald Trump also stressed at a White House press conference the same day that "most of the trade agreements remain in force."

Even if some deals are affected, he indicated they would be replaced with other agreements.

Analysts say that mutual tariff removal will likely benefit the US economy in the short term but could become a burden over the longer run.

If refunded tariffs return to companies that had paid them, it would effectively act as fiscal stimulus, supporting corporate earnings and stock prices.

However, experts warn this could be accompanied by lower tax revenues, a deterioration in public finances and rising Treasury yields.

Jose Torres, chief economist at Interactive Brokers, predicted, "As the likelihood of tariff refunds increases, corporate net profits will improve in the short term."

Ohsung Kwon, chief equity strategist at Wells Fargo, also estimated that eliminating the tariffs would lift S&P 500 Index companies’ pre-tax earnings by 2.4% year-on-year.

James St Aubin, chief investment officer at Ocean Park Asset Management, likewise assessed that the move "could be a factor that triggers a modest rebound in the stock market."

The main beneficiaries are expected to be consumer-goods companies that rely heavily on imports.

Lower raw-material prices and a normalization of trade flows could ease their cost pressures. The bigger concern, however, is the fiscal outlook. The Penn Wharton Budget Model (PWBM) at the University of Pennsylvania (UPenn) estimates that tariff refunds could total 175 billion dollars, or about 254 trillion won, which would directly reduce tax receipts. This runs counter to the Congressional Budget Office (CBO), which earlier this month projected that tariff revenues would help shrink the federal deficit by 3 trillion dollars over the next decade. Phil Blancato, chief market strategist at Osaic, pointed out, "Concerns that the Treasury will have to repay a substantial amount to corporations have triggered a sharp spike in bond yields." He warned that this could feed into a wider fiscal deficit and even raise the risk of a downgrade to the US sovereign credit rating. Higher Treasury yields tend to pull liquidity into the bond market, which can weigh on equities over the longer term. Eddie Ghabour, chief executive officer of Key Advisors, also cautioned that the move could "end up sucking liquidity out of the system." The outlook for manufacturing and the labor market is also divided. Torres warned that if tariffs disappear, the incentive to build manufacturing facilities inside the US could weaken, leading to delayed factory investment and softer hiring. Companies that had planned to set up production bases in the US to avoid tariff costs may now rethink their strategies, he argued. Mark Zandi, chief economist at Moody’s Analytics, took the opposite view. In a post on the social networking service (SNS) X (formerly Twitter), he wrote that tariff policy has been "a major cause of labor-market weakness and economic vulnerability," and said the Supreme Court’s ruling "may be the quickest way to energize the job market." Even so, market participants broadly expect the Trump administration to reimpose tariffs using other legal tools despite the latest ruling. As a result, many analysts believe the economic boost from mutual tariff removal may prove only temporary. US President Donald Trump speaks at a press conference at the White House on the 20th (local time) after the Supreme Court ruled his tariffs unlawful. Photo: Yonhap News Agency

The main beneficiaries are expected to be consumer-goods companies that rely heavily on imports.

pride@fnnews.com Reporter Lee Byung-chul Reporter

· This article has been translated by GripLabs Mingo AI.

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