Within hours of the US Supreme Court striking down his reciprocal tariff regime, President Donald Trump announced a 10% global tariff on most imports by invoking Section 122 of the Trade Act of 1974. The temporary surcharge will take effect on February 24 and remain in force for 150 days, unless withdrawn earlier or extended with congressional approval. The administration has framed the move as a measure to address the widening balance-of-payments deficit while maintaining tariff revenues.
The White House said the US is facing serious external imbalances, citing a goods trade deficit of about $1.2 trillion, a current account deficit of 4% of GDP, and a net international investment position of minus 90% of GDP. These trends, officials argue, pose risks to financial stability and investor confidence, warranting a temporary import surcharge.
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Policy shift after Supreme Court ruling
In a 6–3 decision, the Supreme Court held that the earlier tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, ruling that the President had exceeded statutory authority. Those duties, ranging from 10% to 50%, targeted multiple trading partners including Canada, Mexico, China, Brazil and India.
The judgment has opened the door for potential refunds worth billions of dollars to importers, although the final decision rests with lower courts. More than 1,500 companies had challenged the earlier tariff regime.
Section 122 provides temporary route
Section 122 allows the President to impose an import surcharge of up to 15% for 150 days without prior congressional approval in the event of balance-of-payments pressures. Any extension beyond that period would require legislative backing, where political resistance from Democrats and some Republicans could pose a hurdle. Treasury officials indicated that overall tariff revenues in 2026 are expected to remain broadly unchanged through the use of alternative legal authorities.
Scope of the new duty
The 10% ad valorem tariff will apply to most imports in addition to existing customs duties. However, key sectors have been exempted, including critical minerals, energy products, pharmaceuticals, selected electronics, aerospace goods and certain agricultural items.
Goods traded under the US–Mexico–Canada Agreement will remain duty-free, and products already subject to Section 232 tariffs will not face the additional surcharge.
Fresh probes signal country-specific tariffs
The administration has directed the Office of the United States Trade Representative (USTR) to initiate new investigations under Section 301, signalling that country-specific tariffs could follow. Officials say the objective is to correct broader macroeconomic imbalances while retaining leverage in strategic sectors.
Implications for India and global trade
For export-oriented economies such as India, the measure poses short-term competitiveness risks, particularly in sectors not covered by exemptions, including textiles, engineering goods and certain manufactured products.
Analysts warn that even as a temporary measure, the 150-day tariff could inject policy volatility into global supply chains and heighten trade tensions with major partners.
The move underscores the administration’s intent to pursue an aggressive trade agenda within revised legal boundaries. Congressional response and the trajectory of potential country-specific tariffs will be critical in determining the longer-term impact on global trade flows.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
