What Are Trump's New 10% Global Tariffs and What Comes Next?

The US Supreme Court has ruled that President Donald Trump exceeded his authority by imposing extensive global tariffs under the International Emergency Economic Powers Act (IEEPA). The 6-3 decision clarifies that such taxation powers reside with Congress, not the president. Following this ruling, Trump has enacted a new 10% tariff on imports using an alternative law, Section 122 of the Trade Act of 1974, which may complicate the economic landscape for UK businesses and consumers.

Last updated: 20 February 2023 (BST)

What’s happening now

In the wake of the Supreme Court ruling on 20 February, President Trump has moved quickly to impose a new global tariff of 10% on nearly all imports, leveraging Section 122 of the Trade Act of 1974. This new measure follows the court's decision that the tariffs imposed under the IEEPA were unconstitutional. The ruling opens the door for potential refunds for the estimated $130 billion in tariffs collected thus far, although the process for these refunds is likely to be lengthy and complex.

Key takeaways

• The Supreme Court ruled that President Trump overstepped his authority with tariffs under the IEEPA.
• A new 10% global tariff has been implemented under Section 122 of the Trade Act.
• Refunds for previously collected tariffs may be pursued, but could lead to extended litigation.

Timeline: how we got here

Here is a brief timeline of events leading to the current situation regarding tariffs:

• February 2025: Trump first invokes the IEEPA to impose tariffs on Chinese, Mexican, and Canadian goods.
• July 2025: Trump announces widespread tariffs of 10% to 50% on imports from nearly all countries.
• 20 February 2023: The US Supreme Court rules against the legality of Trump's IEEPA tariffs.
• 21 February 2023: Trump signs a proclamation to impose a 10% global tariff using Section 122.

What’s new vs what’s known

New today/this week

The recent Supreme Court ruling has clarified the limitations of presidential powers in imposing tariffs, stating that only Congress can authorise new taxes. Following this, Trump’s new 10% tariff under Section 122 will affect nearly all imports effective from 24 February 2023.

What was already established

Prior to the Supreme Court ruling, Trump had already imposed tariffs under the IEEPA, claiming a national emergency regarding trade deficits and drug trafficking. Additionally, certain tariffs under Section 232 of the Trade Expansion Act remain unaffected by the ruling.

Impact for the UK

Consumers and households

The new 10% tariffs will apply to imports from the UK, potentially leading to increased costs for consumers. This could affect prices on a wide range of goods, from electronics to food products, as businesses pass on the added costs to customers.

Businesses and jobs

UK businesses engaged in exporting to the US may face higher tariffs, impacting their pricing strategies and profit margins. This could lead to reduced competitiveness in the US market and potential job losses within sectors heavily reliant on exports.

Policy and regulation

The UK government will need to monitor these developments closely, as they may necessitate adjustments in trade negotiations or responses to maintain favourable trade terms. The situation may also influence future discussions between the UK and US regarding trade agreements.

Numbers that matter

• £96 billion: The estimated revenue collected from tariffs imposed by Trump under the IEEPA.
• 10%: The new global tariff that will apply to almost all imports to the US starting 24 February.
• 150 days: The duration for which Section 122 tariffs can be maintained before requiring Congressional approval.

Definitions and jargon buster

• IEEPA: International Emergency Economic Powers Act, which allows the president to regulate trade in response to an emergency.
• Section 122: Part of the Trade Act of 1974 that allows the president to impose temporary tariffs under specified conditions.
• Section 232: A provision of the Trade Expansion Act of 1962 that allows tariffs to be imposed for national security reasons.

How to think about the next steps

Near term (0–4 weeks)

UK businesses should prepare for increased costs and potential changes in consumer behaviour due to the new tariffs. Monitoring the immediate impact on sales and adjusting pricing strategies will be crucial.

Medium term (1–6 months)

As the situation evolves, companies may have to engage in lobbying efforts to mitigate the effects of tariffs. Keeping abreast of court decisions regarding refunds and further tariff regulations will also be essential.

Signals to watch

• Any updates from the US international trade court regarding refunds for previously collected tariffs.
• Changes in consumer spending in response to increased prices due to the new tariffs.
• Statements from UK officials regarding trade negotiations with the US.

Practical guidance

Do

• Review supply chains to assess the impact of tariffs on costs.
• Engage with trade associations for support and guidance.

Don’t

• Ignore the potential for legal challenges regarding tariff refunds.
• Assume that current pricing strategies will remain effective without adjustments.

Checklist

• Assess how the new tariffs will impact your product pricing.
• Communicate with suppliers about potential cost increases.
• Stay informed on legal developments regarding tariff refunds.
• Engage with government support programmes for exporters.
• Prepare contingency plans for potential supply chain disruptions.

Risks, caveats, and uncertainties

While the Supreme Court ruling has provided clarity on the illegality of the IEEPA tariffs, uncertainties abound regarding the effectiveness and longevity of the new Section 122 tariffs. The potential for litigation over refunds is significant, and the outcome of ongoing investigations into trade practices under Section 301 may further complicate the tariff landscape.

Bottom line

The Supreme Court's decision marks a significant shift in the US tariff landscape, particularly for UK businesses. The introduction of a new 10% tariff complicates trade relations and could lead to increased costs for consumers and businesses alike. As the situation develops, ongoing monitoring and strategic adjustments will be critical for UK stakeholders.

FAQs

What tariffs did the Supreme Court rule against?

The Supreme Court ruled against tariffs imposed by President Trump under the International Emergency Economic Powers Act (IEEPA), determining they were unconstitutional.

What is the new tariff that President Trump has implemented?

Trump has implemented a new 10% global tariff on nearly all imports using Section 122 of the Trade Act of 1974, effective from 24 February.

Will refunds for previous tariffs be issued?

While the Supreme Court ruling opens the door for possible refunds, the process is likely to be lengthy and complicated, pending further court decisions.