President Donald Trump has unveiled a new 10 per cent global tariff on foreign imports, invoking the rarely used Section 122 of the Trade Act of 1974 to reassert his trade agenda after a major judicial setback. The temporary ad valorem duty applies to goods from almost all countries and is scheduled to take effect on February 24. Under the statute, it can remain in force for a maximum of 150 days unless Congress approves an extension, placing a strict time limit on what the White House portrays as an emergency economic measure.
The move follows a sharp rebuke from the United States Supreme Court, which in a 6-3 ruling invalidated the administration’s sweeping global tariffs imposed under the 1977 International Emergency Economic Powers Act. The majority led by Chief Justice John G. Roberts was joined by two of the three conservative justices appointed by Trump, Amy Coney Barrett and Neil M. Gorsuch, and the three liberal judges Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson. They ruled that the president did not have the statutory authority to use the IEEPA as a blanket mechanism to levy extensive import duties. According to the ruling, only Congress has the power to impose tariffs during peacetime and that emergency economic legislation could not be used to justify an overarching tariff regime.
The judgment dismantled the legal foundation of what had become a central pillar of Trump’s economic strategy. The effective US tariff rate, which had climbed to 12.7 per cent under the previous regime, fell immediately to 8.3 per cent following the ruling. For an administration that has treated tariffs as both an economic instrument and a geopolitical lever, the decision was a profound setback.
Trump reacted with fury. He described the ruling as “deeply disappointing” and castigated the majority as a “disgrace to our nation”, accusing them of being unpatriotic and disloyal to the Constitution. He also suggested, without offering evidence, that the court had been swayed by foreign interests. At the same time, he praised the three conservative justices (Clarence Thomas, Samuel Alito and Brett Kavanaugh) who dissented, framing them as defenders of executive authority. And he moved swiftly to circumvent the ruling, using Section 122 as an alternative statutory route to sustain his trade offensive.
The administration argues that the new tariff is legally distinct and economically necessary. Section 122 permits temporary trade measures to address “fundamental international payment problems” and what officials describe as a large and serious balance-of-payments deficit. The White House points to a worsening US current account deficit, which it says reached minus 4.0 per cent of GDP in 2024, the largest shortfall since 2008. Meanwhile, the net international investment position has fallen to negative $26 trillion. By imposing a 10 per cent surcharge, the administration says it intends to slow the outflow of dollars, encourage domestic manufacturing, generate well-paying industrial jobs and structurally correct the trade imbalance.
Despite its global scope, the measure is studded with exemptions designed to cushion the domestic economy. Goods entering from Canada and Mexico under the United States-Mexico-Canada Agreement are excluded, as are textiles and apparel from countries covered by the Dominican Republic-Central America Free Trade Agreement. A broad range of essential imports has also been carved out, including critical minerals, energy products, fertilisers, pharmaceuticals, certain electronics and passenger vehicles. Select agricultural goods such as beef, tomatoes and oranges are explicitly exempt to limit consumer price pressures. Products already subject to Section 232 national security tariffs are similarly shielded from the new duty.
Trump maintains that the tariff will preserve his principal source of economic leverage while generating significant revenue to replace funds expected from the invalidated duties. Some analysts estimate that, if sustained, the average tax burden on imports could settle at around 15.4 per cent, only modestly below levels prevailing before the court’s intervention. Simultaneously, the administration has directed the Office of the United States Trade Representative to initiate investigations into alleged unfair trade practices under Section 301 of the Trade Act. These probes will run during the 150-day window and could lay the groundwork for more targeted and permanent tariffs once the temporary measure expires.
For India, however, the legal upheaval in Washington is unlikely to alter the immediate trajectory of bilateral trade. Prior to the court’s ruling, the United States and India had already concluded a separate interim trade arrangement operating outside the contested emergency framework. Under this reciprocal understanding, Washington agreed to reduce tariffs on Indian goods from 50 per cent to 18 per cent, while New Delhi eliminated duties on a wide range of American industrial and agricultural exports.
When asked whether the Supreme Court’s invalidation of the broader IEEPA tariffs would affect this bilateral pact, Trump responded bluntly that “nothing changes”. He confirmed that India would continue to face the agreed 18 per cent tariff on exports including textiles, footwear, chemicals and machinery. Praising Prime Minister Narendra Modi, Trump characterised the arrangement as a fair deal, emphasising that the United States is no longer paying tariffs to India while India continues to pay tariffs to the United States.
Because the interim framework rests on negotiated terms rather than the emergency authorities struck down by the court, its provisions remain intact. In effect, while the Supreme Court has clipped the wings of the administration’s broad unilateral tariff strategy, it has not undone the carefully structured bilateral deals already in place, keeping tariffs at the centre of Trump’s economic statecraft.
