White House Issues Temporary 10% Global Tariff
Following a Supreme Court decision that struck down his previous tariff authority, President Trump signed a temporary 10% global tariff under Section 122 of the Trade Act of 1974. The tariff is effective February 24 for 150 days and includes exemptions for USMCA-compliant goods, energy, pharmaceuticals, autos, and aerospace. The Commerce Department is concurrently investigating trade practices by Japan, the EU, and Canada.
- Section 122 of the Trade Act of 1974 authorizes the president to impose a temporary surcharge of up to 15% for a maximum of 150 days to address a national balance-of-payments deficit. This authority, designed for the fixed-exchange-rate era of the 1970s, has never been invoked before this action. - The move to Section 122 was a direct response to a 6-3 Supreme Court ruling on February 20, 2026, which found that the International Emergency Economic Powers Act (IEEPA) does not grant the president the unilateral authority to impose tariffs. That decision potentially subjects billions of dollars in tariffs collected under IEEPA to refund claims. - Unlike the previous country-specific tariffs levied under IEEPA, tariffs under Section 122 must be applied uniformly to all trading partners. This "non-discriminatory" requirement eliminates the administration's ability to use varying tariff rates to pressure specific countries and penalizes companies that had already diversified supply chains away from certain nations. - The 150-day limit of the Section 122 tariff suggests it is a stopgap measure. Concurrently, U.S. Trade Representative Jamieson Greer announced the initiation of new Section 301 investigations on an "accelerated timeframe" targeting the trade practices of multiple partners, which could lead to more durable tariffs. - This new global tariff does not affect or replace separate, existing tariffs, including the Section 232 duties on steel and aluminum and Section 301 tariffs previously imposed on certain Chinese goods. - Corporate disclosures from manufacturing firms indicate that unpredictable tariffs have recently surpassed supply chain issues as the top-cited business risk. Companies have reported incurring millions in tariff-related costs, which can increase the price of raw materials and components, disrupt production, and negatively impact domestic and international sales. - The White House proclamation justifies the tariff by citing "fundamental international payment problems," including a large and serious balance-of-payments deficit. The stated goal is to reduce the outflow of U.S. dollars and encourage the return of domestic manufacturing. - In addition to the tariff, the President's executive order reaffirms the suspension of *de minimis* treatment for low-value shipments, ensuring these will also be subject to the new 10% duty.
