Trump Hits Globe with New 10% Tariff
Just after the Supreme Court struck down his previous tariffs, President Trump responded by imposing a new 10% global tariff under a different legal authority, Section 122. Analysts at Nomura note this relief is temporary, as Trump has at least five other legal avenues to reinstate tariffs and could reach previous levels by year-end.
The legal justification for this new tariff, Section 122 of the Trade Act of 1974, is an obscure provision designed to address a "balance-of-payments deficit." This authority allows the president to impose a temporary surcharge of up to 15% for a maximum of 150 days without prior investigation, a power that has never been invoked before. After 150 days, any extension of the tariff requires Congressional approval. This move comes directly after the Supreme Court invalidated President Trump's previous tariffs, which were based on the International Emergency Economic Powers Act (IEEPA). The Court ruled 6-3 that the IEEPA, designed for sanctions and asset freezes, does not grant the president the authority to levy taxes or duties, a power the Constitution reserves for Congress. That ruling has exposed the U.S. government to potentially refunding billions of dollars already collected from importers. Economists question the legal premise for using Section 122, arguing that a trade deficit is not the same as a "balance-of-payments" crisis, the original intent of the law. The provision was enacted during an era of fixed exchange rates, and its applicability is now legally debatable under the current system of floating exchange rates. The U.S. trade deficit in goods and services was $901.5 billion in 2025. The new 10% tariff went into effect on February 24, 2026, and applies on top of existing duties. However, the proclamation includes exemptions for goods from Canada and Mexico qualifying under the USMCA, as well as for products like pharmaceuticals, some electronics, and certain agricultural goods. The tariff does not stack on top of existing Section 232 tariffs on items like steel and aluminum.
