US-Mexico Trade: Supreme Court Ruling & New Tariffs Under Trump
The arrival of Donald Trump in office marked a fundamental shift in U.S. Trade policy. Washington moved from being the guarantor of global free trade to one of its most vocal critics and a major driver of protectionism.
While Trump was able to implement his trade policy based on unilateral tariff imposition, the U.S. Supreme Court ruled on that the general tariffs imposed by Donald Trump – including a 25% levy on Mexico starting in – were illegal, exceeding presidential authority under the emergency powers law (IEEPA). However, the tariff structure remains volatile and complex following the swift response from the U.S. Executive Branch to the Court’s decision.
Regarding the impact of the Supreme Court’s decision on the bilateral trade relationship with Mexico, the situation is nuanced. On one hand, the general 25% tariff applied to most Mexican products, as well as specific duties announced in 2025 related to fentanyl and immigration, have been eliminated.
In reaction to the Court’s ruling, the Trump administration announced a new global tariff, initially at 10% and subsequently raised to 15% – the maximum permitted under the Section 122 of the Trade Act of 1974 without Congressional approval. This tariff will apply to Mexico.
However, tariffs linked to the United States-Mexico-Canada Agreement (USMCA) remain in place. Products from Mexico that strictly adhere to USMCA rules of origin continue to be exempt from general tariffs.
For products not associated with USMCA – those that do not meet the requirements of origin – they could still face tariffs, although the overall scenario has shifted from a direct penalty of 25-30% to a lower general tariff of 15%. It’s important to remember that “Non-Stacking” – the rule against the accumulation of tariffs stipulated in Section 232 and IEEPA tariffs (now Section 122) – remains in effect.
There is, however, a disadvantage for Mexico in all of this. Under the previous IEEPA scheme, countries like Vietnam and Brazil faced much more drastic barriers (20% and 50% respectively). As these tariffs are normalized or reduced for the rest of the world, the benefit gap that Mexico maintained has narrowed, making other countries more competitive against Mexican offerings.
Despite this, it can be concluded that the ruling reaffirmed the validity of the USMCA, ensuring that approximately 85% of Mexican exports to the U.S. Remain tariff-free.
despite the new 15% tariff applied to almost all imports, Mexico maintains a relative advantage over other trading partners by being partially protected by the USMCA, strengthening North American trade compared to other regions.
The Supreme Court’s decision, while seemingly beneficial for Mexico, underscores the need for the Mexican government, in conjunction with the business and labor sectors, to closely monitor the rapidly changing international trade landscape.
The core of the legal challenge centered on the International Emergency Economic Powers Act (IEEPA), a 1977 law granting the president authority to regulate commerce during national emergencies stemming from foreign threats. The Court determined that IEEPA does not grant the president independent authority to impose tariffs, a power reserved for Congress. Chief Justice John Roberts, writing for the majority, stated that IEEPA “contains no reference to tariffs or duties.”
The ruling doesn’t address the estimated $200 billion in tariffs already paid by importers. Justice Brett Kavanaugh, in his dissenting opinion, highlighted the potential for $175 billion in refunds to importers, a process he warned could be complex and potentially disruptive to existing trade deals. He noted that IEEPA tariffs have “helped facilitate trade deals worth trillions of dollars” with nations including China, the United Kingdom, and Japan.
The immediate response from the Trump administration – the imposition of a 10% global tariff, quickly raised to 15% under Section 122 of the Trade Act of 1974 – demonstrates a continued commitment to protectionist measures, albeit pursued through a different legal avenue. This escalation introduces further uncertainty into the global trade environment.
The Forbes report indicates that the original tariffs failed to significantly curb the U.S. Trade deficit, which only decreased by 0.2% in 2025 to $901.5 billion, far short of the 78% reduction claimed by Trump. Refunding the $175 billion in collected tariffs could substantially increase the projected 2026 federal deficit, as the revenue has already been spent.
While the USMCA provides a degree of protection for Mexican exports, the new 15% tariff and the potential for increased competition from countries previously facing higher barriers present ongoing challenges. The Council on Foreign Relations notes that the decision leaves most existing tariffs intact and opens new fights over tariff refunds, other tariff authorities, and trade-deal stability.