The annulment of tariffs by the Supreme Court sowed panic but did not change the rules of the game. Donald Trump has no intention of abandoning his protectionist policies and is imposing new import tariffs of 10%, with threats to increase them to 15%. Meanwhile, the existence of other fees disrupts the trade agreement between the U.S. and the European Union. Brussels warns that the total tariff amounts on individual goods exceed the established limit of 15%.

The EU is behaving correctly. It is clear that no one wants a trade war. Yes, the Supreme Court has tied Trump's hands. Now the president cannot raise tariffs at will as he did before. However, should the European Union respond, the infamous Emergency Powers Act could be activated, making things difficult for Brussels.

According to Bloomberg, the average effective tariff rate is estimated to drop from 13.6% to 10.2% as a result of the Supreme Court's verdict, with the new fee set at 10%. If Trump follows through on his threats to raise tariffs to 15%, the figure will rise to 12%.

Effective Tariff Rate in the U.S.

While the numbers themselves may not change much, the impact on countries will be significant. Countries that benefit from lower import tariffs, such as Singapore, Italy, and the UK, will automatically become losers. Conversely, Brazil, India, and China, which were previously the most affected, may find reasons to celebrate.

In the Forex market, the main benefactor appears to be the U.S. dollar. If tariffs mostly fell on Americans' shoulders, as research from the New York Fed shows, lowering rates will benefit the U.S. economy.

Major Suppliers of Goods to the U.S.

Geopolitical factors are putting pressure on the euro. The deadline for Trump's ultimatum to Iran is gradually running out. If Tehran does not back down, the risks of armed conflict in the Middle East will sharply increase. Oil will likely react by continuing its rally. According to ING, a $5-per-barrel increase in Brent prices causes a 1% drop in EUR/USD. Thus, if North Sea crude rises above $85, the main currency pair could fall to around 1.14.

Support for the U.S. dollar is bolstered by Christopher Waller's intention to abstain from voting for a rate cut at the March Federal Open Market Committee meeting unless the labor market severely disappoints. Previously, the official supported the idea of easing monetary policy at each of the past four meetings. If Kevin Warsh takes the chair, he may struggle to find enough "doves" to restart the monetary expansion cycle. This bodes well for the greenback.

Technically, on the daily chart of EUR/USD, "bears" are trying to work out a pin bar with a long upper shadow. Breaking its low near the 1.1765 mark would allow for the building up of previously formed short positions on the euro against the U.S. dollar from the level of 1.1835.