The US Supreme Court struck down President Trump’s broad emergency tariffs levied under the International Emergency Economic Powers Act. The ruling held that more than 175 billion USD in tariffs collected over the past year is subject to refunds.
Instability overwhelms benefits
After the Supreme Court announced its ruling, Trump signed an order for a 10% universal tariff to last 150 days under Section 122 of the Trade Act of 1974. The order took effect on Tuesday. American trade officials say he intends to increase the rate to 15% for some countries.
In the short term, the new 10% tariff could benefit trading partners who have signed or are negotiating trade agreements with the US, as it’s lower than previous levels. It cuts the average US import tariff from 15.4% to 8.3%, according to Global Trade Alert. For countries like China, Brazil, and India who were facing high tariffs, the reduction is in double digits.
Varg Folkman, an analyst at the European Policy Center in Brussels, said that in addition to the 10% tariff, the US could invoke Section 301 of the 1974 Trade Act to investigate alleged unfair trade practices and possibly levy new tariffs.
Niclas Frederic Poitiers, a Research Fellow at the Bruegel think tank in Belgium, said, “It is unclear what will be the rules under this new tariff, so this has to be calculated good by good. At the same time, it is not clear if these tariffs will stand for very long anyway. So right now there's a lot of uncertainty over this.”
Michael Strain, an economist at the American Enterprise Institute, said the Supreme Court ruling may have limited impact on American consumers, because the Trump administration already had plans in place, ready to be deployed in case of an unfavorable ruling. As a result, prices could rise even further this year.
Stephen Kates, a finance expert at Bankrate in New York, said, “I would caution consumers or business owners from assuming that this is going to have an immediate benefit, that this is going to cause immediate lower prices. That isn't likely. What this really does is, again, cause a lot more uncertainty.”
Caution and concern
Countries, especially those that have signed new trade agreements with the US, have responded with relative caution to the new development in US tariff policy. China’s Ministry of Commerce said Thursday it hopes to continue cooperating with the US to implement the consensus reached during the phone call between President Xi Jinping and President Trump on February 4. Observers say it’s unlikely there will be major tariff fluctuations between the two countries ahead of Trump’s visit to China from March 31 to April 2.
Meanwhile, the European Union, the US’s largest trading partner, has more reason for concern. On Tuesday, the European Parliament decided to postpone a vote on the EU-US trade deal reached in July 2025, despite repeated assurances from US and European officials that both sides would maintain the agreement.
Niclas Frederic Poitiers said the US Supreme Court ruling has cast doubt on the EU-US trade deal, as some EU products could face higher tariffs than those stipulated in the agreement if Trump applies the new tariff rates.
Alberto Rizzi, a policy analyst at the European Council on Foreign Relations, which has offices in seven European countries and the US, said the US’s new 10% tariff, which could rise to 15%, makes the US–EU trade agreement “almost meaningless,” as 15% is the tariff the EU would face under the agreement. Once the 10% tariff is applied to all other economies, the EU would no longer retain a competitive advantage from lower tariff rates.
“If you look at the trade deal of last year, there were three points. One was the comparative advantage, one was the certainty, and the third one was to keep the US engaged on Ukraine, at least from the EU side. The third element remains, but the first one is completely gone, and the second one has been massively hollowed out. So I don't think the US came to discard it, but also sees now very little value in the deal that last year seemed a relatively good point,” said Rizzi.
The challenge facing the EU may also test many other economies. In his State of the Union address to the US Congress on Tuesday, President Trump said most countries will continue to abide by the trade agreements they signed with the US. He warned that any country that seeks to abandon their agreement will face higher tariffs.