Developing: Supreme Court Strikes Down Trump Tariffs — New 15% Global Levy Throws Trade Deals Into Chaos
Key Takeaways
- The US Supreme Court struck down Trump's IEEPA-based tariffs as exceeding presidential authority, invalidating the foundation of his global trade regime.
- Trump imposed a replacement 15% global tariff under Section 122 of the 1974 Trade Act — a never-before-used provision that expires after 150 days without congressional approval.
- The EU has suspended ratification of its US trade deal, the UK says 'nothing is off the table' for retaliation, and India has deferred finalisation talks.
- Countries that had negotiated favourable 10% rates, including the UK and Australia, are paradoxically worse off than those with previously higher tariff exposure.
- The S&P 500 fell approximately 1% on Monday as markets priced in the trade uncertainty, with further volatility likely as the 150-day clock ticks toward a congressional showdown.
The US Supreme Court on Friday delivered a landmark ruling that struck down the bulk of President Donald Trump's sweeping global tariffs, declaring that the International Emergency Economic Powers Act (IEEPA) did not authorise the president to impose the levies. The decision invalidated tariffs announced on "Liberation Day" last April that had reshaped global trade flows and prompted months of negotiations between Washington and its trading partners.
Trump responded within hours by announcing a new 10% global tariff under a different law — Section 122 of the 1974 Trade Act — which he quickly raised to 15% on Saturday. The new duties, set to take effect on Tuesday, February 24, have thrown previously negotiated trade deals into disarray. The S&P 500 fell approximately 1% on Monday as markets digested the uncertainty, with the SPDR S&P 500 ETF Trust (SPY) closing at $682.41, down $7.02 on the day.
Countries from the European Union to India are now re-evaluating their trade agreements with the United States, while the UK and other allies that had negotiated favourable 10% rates find themselves potentially worse off under the new blanket 15% levy.
The Supreme Court Ruling That Changed Everything
The Supreme Court's Friday ruling represented a significant check on presidential trade authority. The court found that the IEEPA, a 1977 law designed for national security emergencies, did not grant the president the power to impose tariffs — which are effectively taxes on imports paid by businesses bringing goods into the country.
The decision invalidated the foundation of Trump's aggressive tariff regime, which had imposed rates as high as 145% on Chinese goods and varying levels on imports from dozens of other nations. US Customs confirmed on Monday that it would halt collection of tariffs linked to the now-overturned IEEPA authority.
Trump's pivot to Section 122 represents uncharted legal territory. The provision, which has never been used to impose tariffs before, allows the president to set duties for 150 days without congressional approval. After that period, Congress would need to vote to extend them — and Senate Democratic minority leader Chuck Schumer has already warned that Democrats will block any such attempt. "Democrats will not go along with furthering Trump's economic carnage," Schumer said in a statement on Monday.
EU Suspends Trade Deal, UK Says 'Nothing Off the Table'
The fallout has been swiftest among America's closest allies. The European Parliament announced on Monday that it would put its US trade deal — agreed over the summer — "on hold until further notice." Bernd Lange, chair of the Parliament's International Trade Committee, said "the situation is now more uncertain than ever" and called for "clarity and legal certainty" before any further steps.
The United Kingdom, which had negotiated a 10% tariff rate with Washington, now faces a 15% global levy — effectively penalised for having struck a deal. Downing Street said "nothing is off the table" in terms of reciprocal action, while Business and Trade Secretary Peter Kyle said he has raised concerns with US Trade Representative Jamieson Greer and that "all options are on the table" to protect British businesses.
Andy Haldane, president of the British Chamber of Commerce, highlighted the perverse dynamics of the situation. "Those who got good deals, the allies, have been most disadvantaged," he told the BBC. Analysis from think tank Global Trade Alert found the UK would be among the worst-hit countries, while nations with previously higher tariff rates, such as China and Brazil, would see their relative positions improve.
Asian Economies Face Fresh Uncertainty
Across Asia, governments that had spent months negotiating trade agreements with Washington are scrambling to reassess. India has deferred previously scheduled talks to finalise its recent agreement with the US. China, which is preparing to host Trump in early April, said it is "conducting a comprehensive assessment of the content and impact" of the ruling, while reiterating its opposition to "all forms of unilateral tariff increases."
Japan, South Korea, Taiwan, Singapore, and Indonesia — all of which had made significant concessions or investment pledges in exchange for more favourable tariff treatment — face uncertainty about whether those deals will hold. Itsunori Onodera, a senior member of Japan's ruling Liberal Democratic Party and former defence minister, warned that the situation could "accelerate countries distancing themselves from the US."
Adam Samdin from Oxford Economics cautioned that "even if countries do decide to negotiate, the current US administration is still looking to enforce higher levels of tariffs, regardless of the measures that have been struck down." Sandra Alday from the University of Sydney added that with tariffs applied universally, "foreign products to the US will be more expensive in general."
Markets React as Uncertainty Clouds the Outlook
Financial markets have responded cautiously to the developing situation. The S&P 500 fell about 1% on Monday, weighed down by trade uncertainty. The 10-year Treasury yield stood at 4.08% as of February 20, while the US Dollar Trade Weighted Index registered 117.99, reflecting modest strength amid global economic anxiety.
The Federal Reserve's benchmark rate has been declining steadily, from 4.33% in August 2025 to 3.64% in January 2026, suggesting the central bank has been easing monetary policy even as trade tensions escalate. The interplay between tariff-driven inflation risk and slowing economic growth presents a complex challenge for policymakers.
US Trade Representative Greer attempted to reassure markets over the weekend, telling CBS News that the administration would "stand by" its existing deals. "The legal tool to implement it — that might change, but the policy hasn't changed," Greer told ABC News. However, the gap between reassuring rhetoric and the reality of unilateral tariff increases has left businesses and governments sceptical.
What Happens Next: The 150-Day Clock and Congressional Battle
The new 15% tariffs under Section 122 carry a built-in expiration of approximately 150 days, creating a ticking clock that could force a congressional showdown by mid-July. Trump has also ordered officials to begin investigations under Section 301, a separate trade law that allows tariffs in response to specific "unfair" trade practices — a process that could provide longer-term legal authority for duties but takes months to complete.
Certain product categories will be exempt from the 15% rate, including critical minerals, metals, and pharmaceuticals. Tariffs on specific sectors that were imposed through separate legal authorities — steel, aluminium, automobiles, and aerospace — remain unaffected by the Supreme Court ruling.
Trump warned on Truth Social on Monday that any country attempting to "play games" with the court ruling would face "a much higher Tariff, and worse, than that which they just recently agreed to." The warning appeared aimed at the EU and other partners reconsidering their commitments, but it raises the prospect of a further escalation in trade tensions at a time when the global economy can least afford it.
Conclusion
The Supreme Court's decision to strike down Trump's IEEPA tariffs represents one of the most significant judicial checks on presidential economic authority in modern history. Yet the immediate aftermath has produced not clarity but deeper confusion, as the administration pivots to untested legal tools and trading partners question the durability of agreements negotiated under the previous framework.
For investors and businesses, the situation demands careful monitoring. The 150-day window on Section 122 tariffs creates a defined timeline for resolution, but the parallel Section 301 investigations and the prospect of retaliatory measures from trading partners suggest the uncertainty could persist well beyond that horizon. With the S&P 500 already reflecting unease and global supply chains still adjusting to the post-Liberation Day landscape, the coming weeks will test whether diplomatic channels can restore stability — or whether the world's largest economy is heading into a new phase of trade confrontation.
The deeper question may be whether any tariff framework can survive the current political and legal environment. The Supreme Court has established that emergency powers have limits, Congress is divided on trade policy, and America's allies are losing patience with shifting terms. In a global economy built on predictable rules, the absence of certainty may prove more damaging than any tariff rate.
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