US Imposes New 10% Global Tariff, Aims for 15%
Following a Supreme Court decision limiting its previous authority, the White House has imposed a new 10% global import tariff, with the administration working to raise it to 15%. The new legal basis is reportedly Section 122 of the Trade Act of 1974, a shift causing significant uncertainty for manufacturers. The Penn Wharton Budget Model estimates the policy change will result in an average effective tariff rate of 9.1%.
- The legal justification for the new tariff, Section 122, allows for temporary measures of up to 150 days; any extension requires Congressional approval, setting up a potential political battle just months before the 2026 midterm elections. - This is the first time Section 122 of the Trade Act of 1974 has been used to impose tariffs; legal challenges are expected as the statute was designed to address balance-of-payments deficits under the Bretton Woods fixed-exchange-rate system, not the trade deficits of the current floating-rate era. - The Supreme Court's 6-3 decision in *Learning Resources Inc. v. Trump* invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ruling the president cannot unilaterally set taxes without clear delegation from Congress. This opens the door for importers to claim refunds on duties paid under the voided IEEPA tariffs. - While the new global tariff changes the landscape, the core tariff architecture targeting China remains; duties imposed under Section 301 of the Trade Act of 1974, the backbone of the China tariff regime, were not affected by the Supreme Court's ruling. - The average effective U.S. tariff rate reached 7.7% in 2025, the highest since 1947. Even if the new 10% tariff expires after 150 days, the estimated 2026 average rate of 5.6% would be the highest since 1972. - The administration is expected to use the 150-day window to lay the procedural groundwork for imposing tariffs under other authorities, such as Section 232 (national security) and Section 301 (unfair trade practices), which require formal investigations before implementation. - Certain goods are exempt from the new tariff, including some critical minerals, energy products, and articles entering duty-free under the United States-Mexico-Canada Agreement (USMCA). Products already subject to Section 232 tariffs on steel and aluminum are also excluded from the new surcharge.
