The US Supreme Court’s ruling that President Donald Trump’s steep tariffs are illegal has once again thrown uncertainty into global trade, as the US president imposed new 15% tariffs on Saturday.
Weeks after taking office in January 2025, President Trump used the International Emergency Economic Powers Act (IEEPA) to impose tariffs on enemies and allies, sparking a trade war that rocked global trade.
Recommended stories
list of 3 itemsend of list
But on Friday, the Supreme Court agreed in a 6-3 decision that President Trump exceeded his authority by invoking a 1977 law that allows him to respond to certain national emergencies. The court stated that customs duty is a form of taxation and that under Article 1 of the Constitution, the power to tax vests exclusively in Congress.
However, the court’s ruling does not apply to President Trump’s tariffs on steel, aluminum, lumber, and automobiles. This is because these were imposed under a separate law, Section 232 of the Trade Expansion Act of 1962.
After the ruling, an enraged President Trump called the Supreme Court justices “very unpatriotic and unconstitutional” and “stupid pet dogs.” He immediately signed an executive order imposing a flat 10% tariff on all countries with which the United States trades starting February 24 under Section 122 of the United States Trade Act of 1974. On Saturday, it raised tariffs to 15%, the highest rate allowed under the trade law.
So what is this new trade law that President Trump has used to impose tariffs? What does this mean for the trade agreements the United States already has with countries around the world?
Here’s what we know:
What are the new trade laws President Trump is adopting?
Under U.S. law, Section 122 of the U.S. Trade Act of 1974 gives the president the power to impose tariffs of up to 15% to address “significant and severe balance of payments deficits.”
Tariffs would be imposed under the law for only 150 days unless the U.S. Congress agrees to an extension. President Trump is the first president to use this law to impose tariffs.
The White House said in a statement Friday that some goods will temporarily be exempt from the tax, including certain agricultural products such as beef and tomatoes, natural resources and fertilizers that cannot be grown or produced in the United States, and aerospace products.
International trade lawyer Shantanu Singh said this is the first time a U.S. president has used this legal power, so litigation is likely.
“However, the government has considerable leeway to decide on this, as the trade deficit can form part of the balance of payments deficit,” he told Al Jazeera. President Trump has justified the tariffs as a way to balance the US trade deficit of more than $900 billion.
What will happen to trade agreements?
Several countries had signed trade deals last year to ease President Trump’s punitive tariffs. The United Kingdom, India, the European Union and others had previously struck deals to lower export tariffs to the United States.
But the ongoing tariff landscape casts doubt on the future of these trade deals. Will they be subject to a new 15% tariff or will they be subject to the agreed tax rate signed in the trade agreement? Will India be subject to an 18% tariff as per the trade deal, or will it be 15% as announced by President Trump on Saturday?
President Trump told reporters Friday that some of those trade deals will remain in place.
“Trade agreements are international, so they are likely to remain in place,” said Singh, an international trade lawyer.
But after the Supreme Court’s ruling, the big incentive to cut trade deals with the Trump administration to get ahead of competitors and cut reciprocal tariff rates disappeared, he said.
“This reduces the incentive for trading partners to comply with parts of the agreement for the time being,” he said.
Here’s a look at some trade deals and what their future holds.
England
Britain was one of the first countries to sign a trade deal with the United States in May last year, after it was slapped with a 5% tariff on steel and aluminum exports and a 25% tariff on cars and auto parts.
Under the agreement, the US agreed to zero tariffs on steel and aluminum imports from the UK, and set tariffs at 10% on other items. In December last year, the two countries also agreed to zero tariffs on pharmaceuticals and medical products.
After Friday’s Supreme Court ruling, William Bain, head of trade policy at the British Chambers of Commerce, said in a statement that the ruling “does little to clear up the murky waters of business.”
On Friday, a spokesperson told the media that the British government was “working with the United States” to better understand how the court’s decision would affect the UK.
The court’s decision does not affect the UK’s agreements on exports of steel, aluminum and pharmaceuticals.
But Bain said the new 15% global tariffs imposed under Section 122 of the Trade Act of 1974 “will be detrimental to trade, detrimental to U.S. consumers and businesses, and will weaken global economic growth.”
China
President Trump had imposed one of the highest tariffs on China, and the world’s two largest economies were engaged in a trade war. At one point, they imposed reciprocal tariffs of more than 100% on some products.
The two countries have not yet signed a trade deal, but have agreed to lower tariffs as part of a trade ceasefire.
After several rounds of trade negotiations and a summit meeting between President Trump and Chinese President Xi Jinping in South Korea in October, the two countries agreed to a one-year ceasefire that would impose a basic tariff of 10%. President Trump also lowered the so-called fentanyl tariff to 10%.
The Supreme Court’s ruling will eliminate tariffs on chemicals used in fentanyl. However, tariffs on other Chinese exports such as electric vehicles, aluminum and steel will remain in place.
After the court’s ruling, Chinese Embassy Spokesperson Liu Pengyu told reporters that tariffs and trade wars are not in the interests of the United States and China. He called on China and the United States to work together to “bring greater certainty and stability to China-US economic and trade cooperation and the global economy.”
President Trump is scheduled to visit China from March 31 to April 2 to meet with President Xi and discuss trade.
But Singh, the trade lawyer, said countries that did not negotiate a deal with the United States, such as China, were in a much better position because they were able to achieve lower tariff rates without making concessions as a result of court rulings and the elimination of reciprocal tariffs.
“China will definitely feel that it has an advantage in negotiations with the United States,” he said.
Southeast Asia
Last year, Southeast Asian countries Indonesia, Malaysia, Vietnam, and Cambodia signed trade deals with the Trump administration that lowered tariffs.
After their respective trade deals with the US last year, Malaysia lowered its tariffs from 25% to 19% and Cambodia lowered its tariffs from 49% to 19%. Vietnam and Indonesia also signed agreements to reduce tariffs to 20% and 19%, respectively.
After the Supreme Court ruling, President Trump’s trade representative, Jamieson Greer, told Fox News that even though the universal tax rate was pegged at 15% on Saturday, U.S. imports from countries such as Malaysia and Cambodia will continue to be taxed at the negotiated rate of 19%.
Airlangga Hartarto, Indonesia’s chief negotiator on U.S. tariffs, also said that despite the court’s decision, the trade agreement between the two countries that set U.S. tariffs at 19% remains in effect.
India
India faced one of the highest US tariffs of 50%. The US first imposed a 25% tariff on imports from India, then added another 25% due to India’s purchase of Russian crude oil.
Earlier this month, the United States and India agreed to a framework trade agreement. President Trump said Prime Minister Narendra Modi had agreed to halt purchases of Russian crude oil and agreed to reduce U.S. tariffs to 18% on India’s major exports to the U.S., including clothing, medicine, precious stones and textiles. India announced it would eliminate or reduce tariffs on all U.S. industrial products and a wide range of agricultural products.
An Indian trade delegation scheduled to go to the US to iron out details of a trade deal has been postponed.
european union
Last July, the EU and the US signed a deal to avoid a transatlantic trade war after President Trump imposed 30% tariffs on imports from 27 member countries. Under the agreement, EU exports to the US will be subject to a 15% tariff.
But the deal had not yet entered into force since EU lawmakers suspended ratification last month after President Trump threatened to annex Greenland, an autonomous Danish territory.
The European Parliament’s trade committee is scheduled to vote on a trade deal between the EU and the US on February 24, but the future of the deal is uncertain due to a Supreme Court ruling and President Trump’s new tariffs.
An EU Commission spokesperson told reporters after the court’s ruling that the EU was “in close contact” with the US government to seek further clarification.
Mexico
Mexico was one of the first countries targeted by President Trump’s tariffs last year. It was affected by 25% tariffs on some pharmaceutical products and President Trump’s additional 25% “fentanyl tariff” on drugs entering the United States across the Mexican border.
The United States-Mexico-Canada Agreement (USMCA), which took effect in July 2020, exempts approximately 85% of goods exported from Mexico to the United States from customs duties.
The Supreme Court’s ruling will reduce tariffs on Mexican exports.
However, the USMCA is scheduled to be revisited later this year, and it is unclear whether products exempted from U.S. tariffs under the agreement will be taxed once the agreement expires.
Mexico’s Economy Minister Marcelo Ebrard said he would visit the United States in the near future to discuss the issue.
Canada
Canada faces 35% tariffs on products in certain sectors, such as steel and aluminum, and most products are affected by 50% duties on imported metals and 25% duties on non-U.S. vehicles.
Most of the company’s products are exempt under existing USMCA.
Following the court ruling, Canada-U.S. Trade Minister Dominic LeBlanc told reporters that significant work remains as tariffs imposed by Washington on steel, aluminum, softwood lumber and automobiles remain in place.
Additionally, with a review of the USMCA looming later this year, some Canadian leaders are concerned about what President Trump will do next.
What happens next?
Countries are waiting to see how the Supreme Court’s ruling and President Trump’s new tariffs will develop.
Singh, the trade lawyer, said the administration is likely to take advantage of the 150-day period during which the 15% global tariff under Article 122 will take effect.
“During this period, the Office of the United States Trade Representative will conduct expedited investigations under Section 301, another statutory authority, to uncover findings regarding unfair trade practices of trading partners and to restore reciprocal tariff rates that have been invalidated,” he said.
“Trade agreements could then be adjusted to reflect this new reality.”
