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Comment on Post-SCOTUS U.S. Tariff Measures and Impacts on UK & EU Trade Deals

Andrew Thurston · Posted on: February 23rd 2026 · read

The Supreme Court of the United States (SCOTUS) announced on February 20, 2026, that President Trump does not have authority under the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. This announcement marks a significant legal and political moment in U.S. trade policy and creates a surge of opportunities for US importers financially impacted by the imposition of the tariffs since April last year.

Although this ruling invalidates a key pillar of the Trump administration’s tariff regime, the President was quick to install counter legislation to continue his policy of protectionist trade measures. Almost immediately, the President acted swiftly to reframe the tariff strategy through other statutory authorities, most notably Section 122 of the Trade Act of 1974.

Under Section 122, President Trump has imposed a temporary global import surcharge, initially 10% and subsequently increased to 15% on most goods entering the U.S. Those listed in Annexes I and II of the Executive Order are excluded from these new measures and include Pharmaceuticals, Automotive, etc, already subject to separate Section 232 measures.

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Customs and Excise Duty

This surcharge is designed to be a broad substitute for the now-invalidated IEEPA tariffs and applies uniformly across nearly all trading partners for up to 150 days unless extended by Congress. The administration justifies this move as a response to “fundamental international payments problems,” a statutory phrase referring to imbalance in trade and payment flows under the 1974 Trade Act.

In basic terms, Section 122 allows the President to temporarily raise import costs for all trading partners to address economic issues, but it does not permit indefinite, permanent, or discriminatory tariffs without legislative approval. It is meant to be a short-term tool, distinct from emergency powers like IEEPA and different from longer-term trade authorities such as Section 232 (national security) or Section 301 (unfair trade practices).

How does this impact the UK and EU?

"This rapid shift has created significant uncertainty for international trade negotiations, particularly with key partners such as the United Kingdom and the European Union. Both partners signed or advanced trade arrangements with the U.S. over the last year, negotiated in part to reduce tariff barriers and stabilize tariff expectations. These agreements included negotiated tariff schedules and ceilings intended to offer clarity and certainty for exporters and investors."

Andrew Thurston, Partner

In their statement on the 22 February, European officials made it clear that the United States must adhere to previously agreed tariff ceilings and commitments, stating “EU products must continue to benefit from the most competitive treatment, with no increases in tariffs beyond the clear and all-inclusive ceiling previously agreed” and requested full clarity on the situation.

In the UK, although no formal statement has been issued by the Prime Minister, senior UK Government spokespersons have reiterated that the UK expects its favourable trade relationship with the U.S. to continue despite the introduction of the Section 122 tariffs.

UK officials have engaged with U.S. counterparts to assess the impact on the UK-U.S. Economic Prosperity Deal (EPD). The uncertainty is especially acute for sectors like manufacturing, where U.S. tariff changes have direct cost implications for supply chains and competitiveness.

The central issue for both the UK and EU is not just whether trade deals are still valid in principle, but whether unpredictable tariff changes under Section 122 undermine the predictability and stability that exporters rely on. Trade agreements rest on binding commitments to tariff ceilings and reciprocal concessions; the current approach risks creating a climate where those commitments are seen as susceptible to abrupt reinterpretation or replacement. This volatility has already led to reduced confidence in markets, as reflected in recent financial volatility and uncertainty among European business leaders

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Customs and Excise Duty

15%

What about low value imports?

The Section 122 tariff of 15% will apply to nearly all imports, including low-value consignments that were previously exempt under the de minimis threshold removed in August 2025.

This means that even small B2C or DDP shipments are now subject to the Section 122 surcharge on top of any existing ad-valorem duties, effectively layering the new surcharge over standard tariffs.

The cost of importing low value consignments into the US just got more expensive for the consumer as the Section 122 surcharge now adds an additional, uniform cost, onto the cost of the goods which wasn’t applicable under IEEPA.

Businesses selling e-commerce into the U.S. must now review the effect that this 15% tariff will have on the short-term strategy of the business.

What next?

While Section 122 provides a stop-gap mechanism for President Trump to sustain tariff revenue and prevent an immediate void following the SCOTUS decision, it is only temporary and not tailored to the specific negotiated terms of bilateral or plurilateral trade agreements.

We expect more information to be forthcoming in the upcoming weeks as the Administration may initiate the use of other statutory tools such as Section 232 and Section 301, each of which has more defined legal bases but requires investigations, findings, or specific grounds (e.g., national security or unfair practices) before tariffs can be applied. The 150 days will allow for the investigation period to be complete, minimising any tariff revenue loss.

In summary, the rapid imposition of a temporary surcharge under Section 122, while legally distinct from the IEEPA tariffs struck down by the Supreme Court, introduces fresh trade policy complexities.

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These complexities affect the implementation and confidence in recent UK and EU trade agreements with the United States, as exporters, legislators, and regulators on both sides navigate an evolving tariff landscape. For businesses trading with the U.S., this will be a familiar, but new challenge as they look to determine the challenges posed by this new regulation.

Even though this is only for 150 days, this does not mean that the tariffs will end. We expect that President Trump and his Administration will now assess the data from IEEPA tariffs against key policy manufacturing growth areas and target imports under Section 232 measures later in the year.