US president imposes immediate 10% global tariff after Supreme Court struck down Liberation Day rates
In a six to three majority ruling, the Supreme Court ruled that tariffs on products entering the US were not allowed using the International Emergency Economic Powers Act 1977 (IEEPA).
Moving quickly to reinstate tariffs in some form, President Donald Trump issued two executive orders over the weekend introducing a new 15% global tariff, valid for 150 days initially. This can be extended if congress approves the measure.
Trump posted to Truth Social, stating his intention to implement a ‘fully allowed, and legally tested, 10% level’.
The president said: ‘During the next short number of months, the Trump administration will determine and issue the new and legally permissible tariffs, which will continue our extraordinarily successful process of making America great again.’
The first executive order, issued on Friday 20 February detailed that the tariffs ruled illegal ‘shall no longer be in effect and, as soon as practicable, shall no longer be collected’.
The second order issued later the same day, Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems, replaced the Liberation Day tariffs with a temporary 10% ‘ad valorem duty’, initially, later increased to 10%.
"This rapid shift threatens the stability and predictability that underpin recent UK-U.S. trade arrangements, including the Economic Prosperity Deal, particularly for sectors such as manufacturing where costs and supply chains are directly affected."
"From a UK perspective, the key concern is whether these temporary measures will respect the negotiated tariff ceilings and commitments agreed with the US so far."
Although UK officials are engaging with Washington to safeguard favourable trade terms, the uncertainty created by Section 122 could erode confidence among exporters and investors.
‘The 150 day surcharge period offers only a short-term stopgap, and further measures under Section 232 or 301 later this year could complicate the trade landscape even more. UK businesses must now assess the immediate cost impacts and remain alert to the evolving US trade policy environment.’
The second executive order, section 17, stated: ‘Section 122 authorises the president to impose, for a period not exceeding 150 days unless extended by an Act of the Congress, a temporary import surcharge up to 10% ad valorem and other temporary limitations on articles imported into the United States in situations of fundamental international payments problems.’
It is not clear at this stage whether the blanket 15% tariff will be payable by countries which negotiated a lower rate, such as the UK’s 10% agreement on certain products.
Robbie Wigley-Jones, Partner at Andersen LLP said: ‘The new US tariff regime will inject a higher degree of volatility into the business environment. When combined with tightening US immigration regulations, the United States is becoming a more complex and costly market for sustaining long-term investment.
‘This climate is likely to accelerate a strategic pivot toward alternative geographic markets and prompt a fundamental reassessment of supply chains, not only for components and production, but also for talent.
‘While the impact will vary by sector, sustained policy uncertainty at this level has the potential to reshape future business models in meaningful and lasting ways.’
Supreme Court ruling
The ruling was authorised by chief justice John Roberts, who was joined by two fellow conservatives and three liberal justices in the majority. In the ruling, Roberts wrote: ‘We hold that IEEPA does not authorise the president to impose tariffs.’
The 170-page document explained: ‘Against that backdrop of clear and limited delegations, the government reads IEEPA to give the president power to unilaterally impose unbounded tariffs and change them at will. That view would represent a transformative expansion of the President’s authority over tariff policy.’
The ruling continued: ‘Accordingly, the president must ‘point to clear congressional authorization” to justify his extraordinary assertion of that power.’
Rebutting Trump’s emergency-based argument, the ruling stated: ‘Those precedents are facially inapposite, as all agree the president lacks inherent peacetime authority to impose tariffs.
Continuing it stated: ‘Inferences from wartime precedents through multiple iterations of… IEEPA cannot support, much less clearly support, a reading of IEEPA that includes the distinct power to impose tariffs.’
This is not the end of the road in the Trump tariff saga, as the president is still able to impose tariffs through other laws.
In opposition to the ruling, conservative justice Brett Kavanaugh said in the ruling: ‘The Court's decision is not likely to greatly restrict presidential tariff authority going forward.
‘But the Court's decision is likely to generate other serious practical consequences in the near term. One issue will be refunds. Refunds of billions of dollars would have significant consequences for the U. S. Treasury.’
On the topic of potential refunds, Kavanaugh wrote: ‘The Court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers.'
Kavanaugh wrote the process of any refunds ‘is likely to be a "mess," as was acknowledged at oral argument.’ According to the latest data from US Customs and Border Protection, the US has collected $130bn (£96.3bn) in taxes from the tariffs. It is not clear how and if paid tariffs will be refunded, or what the process would be.
