Details of the New 10% Global Tariff
Unlike the previous tariffs implemented under the International Emergency Economic Powers Act (IEEPA), which the Court ruled illegal, the new 10% levy will be enforced under Section 122 of the 1974 Trade Act. Under Section 122, these tariffs are limited to a maximum of 150 days unless Congress votes to extend them. Trump stated this new tariff will apply “on top of” existing duties, including the industry-specific Section 232 (steel and aluminum) and Section 301 (China-specific) tariffs, which remain in effect. The President also announced the initiation of several new Section 301 investigations to target what he described as “unfair trading practices” by foreign nations.
The Supreme Court Setback
The announcement came just hours after the U.S. Supreme Court ruled 6-3 in Learning Resources Inc. v. Trump that the President exceeded his authority by using emergency powers to bypass Congress on trade policy.
Majority Opinion: Chief Justice John Roberts wrote that the power to levy duties belongs solely to Congress under Article I of the Constitution.
Trump’s Reaction: Trump called the ruling a “disgrace” and accused the Court of being “swayed by foreign interests”. He noted that while the court limited one tool, he has “very powerful alternatives” that could potentially bring in even more revenue.
Economic Implications
The invalidation of the previous “Liberation Day” tariffs could force the U.S. government to refund an estimated $142 billion to $175 billion already collected from importers.
Following the news of the 10% replacement tariff, analysts at The Budget Lab at Yale suggested that the immediate price level impact for U.S. households remains high, as the administration seeks to maintain a “high tariff wall” despite the court’s rebuke.
