On Friday, February 20, a Supreme Court ruling would strike down President Trump’s ongoing “Liberation Day” International Emergency Economic Powers Act (IEEPA) tariffs in a 6-3 vote under the reasoning that the act did not authorize the president to impose broad-based tariffs. However, in the wake of these old tariffs being recently dismissed, Trump has been quick to respond with new ones, starting globally at 10% before rising to 15%, using a different trade policy, Section 122 of the Trade Act of 1974, promoting future uncertainty.
Following the Court’s ruling on the same day, Trump would take to social media and state how the decision was “ridiculous” and “extraordinarily anti-American,” being quick to establish his new line of tariffs. Moving past the old IEEPA-based tariffs, these new 15% global tariffs based on Section 122 of the Trade Act of 1974 are more limited in scope, most particularly running on a 150-day rule that would mean they would need to be voted to be extended by Congress or expire on July 24, 2026. According to Philip Luck, who is a director of the economics program at the nonpartisan Center for Strategic and International Studies, “Section 122 is for a balance of payments crisis, which is when you don’t have enough foreign reserves to pay external debts”. Additionally, he would note that while the U.S. “has a very large trade deficit,” so long as we can “continue to sell assets to the global market, we have no challenge conducting international trade.”
With the old average 16% tariffs having been dismissed, trade agreements made under the old tariffs between the U.S. and other nations leave trading partners uncertain about what to expect moving forward. While U.S. Trade Representative Jamieson Greer would say on February 22 that the Trump administration would stand by deals made under the IEEPA tariffs and expected partners to do the same, reactions have been less than positive. A top European Union lawmaker on that same day would propose a pausing of the ratification of the new agreement between the EU and the U.S. and India, which had agreed to an 18% deal, has since postponed a trade visit to Washington that aimed to finalize the agreement, according to CNBC. On social media, chair of the European Parliament’s international trade committee, Bernd Lange, would describe the “pure tariff chaos on part of the U.S. administration”—that “no one can make sense of it anymore—only open questions and growing uncertainty for the EU and other U.S. trading partners.”
In a similar vein, while these measures have been notably done in order to protect domestic manufacturers, according to William Reinsch, a senior advisor at the Center for Strategic and International Studies and former president of the National Foreign Trade Council, manufacturers importing components used in fabrication faced higher costs as a result of the tariffs that limited production. This plight was in addition to long-term issues beyond these measures, such as an industry-wide shift to automation and fierce global competition with trading partners who have increased subsidies on key industries in order to offset higher tariff costs.
However, even Trump himself is not entirely satisfied with these tariffs, as he is currently already looking for a more concrete solution — possibly through the utilization of other trade laws like Section 301 of the Trade Act (expiring instead after 4 years) that would allow Trump to enact country-based tariffs in the situation where the U.S. Trade Representative determined a trading partner was engaging in unfair trade practices. In fact, he has already launched investigations into unfair trade practices in order to secure said potential tariffs, explaining that “we have other ways, numerous other ways” and that “the numbers can be far greater than the hundreds of billions we’ve already taken in.”
