Intro: A recent US court ruling on tariffs could significantly change trade policy direction and reduce prevailing global uncertainty
According to a report by SBI Research, a US court’s decision to strike down the existing tariff structure may reshape the global policy environment. The report said countries may need to adopt “counter-intuitive” negotiation strategies during the interim phase, as the final authority on tariffs lies with a closely divided US Congress.
The US Supreme Court invalidated the administration’s use of tariffs under the International Emergency Economic Powers Act. The law had never been used earlier by a US President to impose tariffs and was not designed for such action in peacetime.
Soon after, the US administration invoked Section 122 of the Trade Act of 1974 to impose a temporary 10 per cent tariff on all imports for 150 days starting February 24, 2026. This step, taken for the first time under this section, will remain in effect until July unless approved by Congress. The law allows temporary import surcharges of up to 15 per cent to address balance of payments concerns.
Certain exemptions apply, including goods from Canada and Mexico under USMCA and specific national security tariffs. During this period, the administration is expected to consider other legal routes such as Sections 301 and 232 for future tariffs.
The report added that the ruling may not fully restrict the President’s powers under other laws. However, it could create uncertainty around ongoing trade agreements worth trillions of dollars, affecting global trade stability.
