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US Court's Tariff Ruling Sparks Policy Uncertainty, New 10% Global Levy

The US Supreme Court has issued a landmark decision invalidating the President's use of a 1977 emergency act to impose tariffs, a move SBI Research says could reshape the policy landscape and increase uncertainty. In response, the executive branch has quickly invoked a separate authority under the 1974 Trade Act to impose a new 10% global tariff on most imports for 150 days, starting in February 2026. The court's decision casts doubt on existing trade deals worth trillions of dollars facilitated by the now-invalidated tariffs, potentially disrupting agreements with nations like China, the UK, and Japan. SBI Research notes that ultimate authority now rests with a finely balanced US Congress, forcing countries to adopt strategic, counter-intuitive negotiations during this interim period.

Key Points: US Court Tariff Ruling Reshapes Policy, Triggers New Global Tariff

  • US Supreme Court invalidates presidential tariff authority
  • New 10% global tariff invoked under 1974 Trade Act
  • Ruling creates uncertainty for trillions in trade deals
  • Countries may need "counter-intuitive" negotiation strategies
2 min read

US court's move on tariffs could reshape policy landscape, alter trajectory of uncertainty: SBI Research

US Supreme Court invalidates tariff structure, prompting new 10% global import levy. SBI Research warns of policy uncertainty and complex negotiations.

"Unscrapping of the tariff structure by the Court(s) can upend uncertainty going forward - SBI Research report"

New Delhi, February 22

The United States court's move to invalidate the tariff structure could reshape the policy landscape and alter the trajectory of uncertainty, SBI Research said.

The report noted that countries may need to adopt "counter-intuitive" negotiation strategies to position themselves during the interim period, as ultimate authority over tariffs rests with a finely balanced US Congress.

It added that the interaction between inter-sovereign treaties and actions by juristic persons on tariff matters could create complexity, if not disruption, in determining an effective tariff framework.

"Unscrapping of the tariff structure by the Court(s) can upend uncertainty going forward while jurisdictions need to put in place counter intuitive negotiation to position themselves strategically in the intermittent period where ultimate power lies with a delicately balanced US Congress," the report noted.

The US Supreme Court issued a landmark decision that invalidated the POTUS/Administration's use of imposing tariffs under the International Emergency Economic Powers Act (IEEPA), 1977. The act had never before been used by a President to impose tariffs and does not find much footing in peacetime.

However, the executive has quickly invoked Section 122 of the 1974 Trade Act to impose new 10% global tariff on all imports to US for 150 days (note: this will be the first time Section 122 authority has ever been used). This temporary measure will start from 24 Feb 2026 and ends in July should the Congress not ratify the imposition.

Under the trade Act, President can impose temporary import surcharges (up to 15%) or quotas to fix US balance of payment issues. It lasts up to 150 days max, unless Congress extends via legislation.

The new 10% tariff has exemptions, including goods from Canada and Mexico that comply with the USMCA, as well as specific, already-in-place national security tariffs.

It is expected that during this time, the Administration would complete investigations and levy tariffs using Section 301 and Section 232, the report noted.

SBI Research noted that with respect to tariffs in particular, the Court's decision might not prevent President from imposing most if not all of these same sorts of tariffs under other statutory authorities.

A second issue is the decision's effect on the current trade deals. Because IEEPA tariffs have helped facilitate trade deals worth trillions of dollars--including with foreign nations from China to the United Kingdom to Japan, the Court's decision could generate uncertainty regarding various trade agreements. That could be difficult, it said.

- ANI

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Reader Comments

P
Priya S
More uncertainty in global trade is the last thing we need. Just as our manufacturing sector is picking up under PLI schemes, this happens. Hope our government has a solid plan B. The exemption for Canada and Mexico shows regional alliances matter, we must strengthen our own trade pacts.
R
Rohit P
The US Supreme Court checking executive power is good for democracy, but the resulting policy chaos is bad for business. 🇮🇳 Indian companies with exposure to the US market should prepare for volatility. This 10% global tariff, even if temporary, will squeeze margins.
S
Sarah B
Interesting analysis from SBI. The key takeaway is that the President still has other tools (Section 301/232). So the tariffs might not go away, they'll just come through a different door. India should use this legal confusion as a bargaining chip in ongoing trade talks.
V
Vikram M
With respect, I think the report is overcomplicating things for the average reader. The bottom line is simple: American policy is unpredictable. We must reduce over-dependence on any single market and aggressively diversify our export destinations. Atmanirbhar is more relevant than ever.
K
Karthik V
The exemption for USMCA countries is telling. It pushes the cost onto non-allied nations. This is a wake-up call. We need to fast-track trade agreements with the EU, UK, and other partners to create our own secure trade blocs and not be at the mercy of US domestic politics.

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