Washington D.C. – President Donald Trump, following a significant defeat at the Supreme Court regarding his authority to impose tariffs, announced Friday evening the implementation of a new 10% “global tariff” on all imported goods. The move, delivered via a Truth Social post, comes just hours after the court struck down his previous attempt to levy tariffs using the International Emergency Economic Powers Act (IEEPA).
The Supreme Court’s 6-3 ruling effectively invalidated many of the tariffs Trump had imposed, arguing that IEEPA does not grant the President the authority to impose such duties. The decision prompted a defiant response from the President, who publicly criticized Justices Neil Gorsuch and Amy Coney Barrett, both his own nominees, for siding with the majority. He characterized the ruling as “deeply disappointing” and expressed shame over the justices’ decision, suggesting a lack of courage to act in the country’s best interest.
The newly announced tariffs, authorized under Section 122 of the Trade Act of 1974, are slated to take effect “almost immediately” and will be in place for a 150-day period. White House officials clarified that the new tariffs will operate alongside existing levies that remained intact after the Supreme Court’s decision. The Section 122 tariffs are intended to replace the IEEPA-based duties that were nullified by the court.
The immediate market reaction was positive, with the S&P 500 rising and the Dow Jones Industrial Average gaining over 200 points following the announcement. This suggests investors interpreted the move as a signal that the administration is attempting to provide clarity, even if the overall direction remains protectionist.
Impact on International Trade, Particularly with India
While the new tariff is “global” in scope, the impact will vary significantly depending on existing trade agreements. Notably, countries with established trade deals with the United States, including India, will see their tariff rates lowered to 10%. This represents a reduction from the previously applied 25% “reciprocal” tariff. According to sources at CNBC-TV18, the previously agreed-upon 18% rate for Indian goods had not been formally notified, resulting in the direct reduction to 10%.
This adjustment to the India-US trade framework may necessitate a review of existing agreements, according to experts. The change effectively lowers the cost of Indian goods entering the US market, potentially boosting exports. However, the temporary nature of the 150-day tariff period introduces uncertainty for businesses planning long-term trade strategies.
The Legal and Economic Context
The Trump administration has consistently advocated for tariffs as a means of bolstering domestic manufacturing and addressing trade imbalances. The initial tariffs imposed under IEEPA were justified as necessary to protect national security and address unfair trade practices. However, the Supreme Court’s ruling challenged the legal basis for these actions, asserting that the President had overstepped his authority.
The economic impact of the initial tariffs, and now the new 10% levy, remains a subject of debate. While proponents argue that tariffs incentivize domestic production and create jobs, critics contend that they raise costs for consumers and businesses, disrupt supply chains, and invite retaliatory measures from other countries. RSM chief economist Joseph Brusuelas characterized the likely economic fallout from the Supreme Court ruling as “narrow,” but acknowledged potential benefits for tariff-sensitive sectors like retail and manufacturing.
Looking Ahead: Refunds and Future Policy
The Supreme Court’s decision raises the question of whether companies that paid tariffs under the invalidated IEEPA authority are entitled to refunds. This could represent a significant financial liability for the government, although the exact amount remains unclear. The administration has not yet provided guidance on this issue.
the President’s announcement of the new 10% tariff under Section 122 of the Trade Act of 1974 signals his continued commitment to protectionist trade policies. Section 122 allows the President to impose tariffs to address unfair trade practices, but We see subject to certain limitations and requires a finding of “serious injury” to domestic industries. The administration’s ability to successfully defend these tariffs under Section 122 may face further legal challenges.
The situation remains fluid, and businesses are closely monitoring developments for potential impacts on their operations. The 150-day timeframe for the new tariffs provides a limited window for adjustment, and the possibility of further policy changes adds to the uncertainty. The Federal Reserve will also be watching closely, assessing the potential inflationary pressures and broader economic consequences of the new tariffs.
The White House has indicated that the new tariffs will effectively replace the IEEPA duties, potentially leading to lower costs for some U.S. Businesses. However, the overall impact on the U.S. Economy and global trade remains to be seen, dependent on the administration’s future actions and the responses of other nations.
