Trump invokes 1974 trade law to impose 10% global tariff after SC setback

US President invokes Section 122 to impose 150-day import surcharge from February 24, citing a widening balance-of-payments deficit after Supreme Court strikes down reciprocal tariffs

US President Donald Trump signed an executive order imposing a 10 per cent global tariff on most foreign goods, hours after the Supreme Court of the US struck down his earlier reciprocal tariff plan.

 

In a fact sheet issued on February 20, Trump invoked Section 122 of the Trade Act of 1974 to levy a temporary import surcharge for 150 days. The new duty will take effect at 12:01 am Washington time on February 24 and remain in force until July 24, unless terminated earlier or extended by Congress.

 

Announcing the move on Truth Social, Trump called it a “Global 10 per cent Tariff on all Countries” and said it would take effect almost immediately. He criticised the justices who voted against his previous tariff action, calling their decision “ridiculous”, and vowed to keep tariff revenues strong.

 

He added: “But now the adjustment process begins, and we will do everything possible to take in even more money than we were taking in before!”

Supreme Court blocks emergency tariff powers

Earlier, in a 6–3 decision, the Supreme Court ruled that Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs last year was unlawful. Those duties, ranging from 10 to 50 per cent, targeted several trading partners, including Canada, Mexico and China, and were justified partly on grounds of tackling fentanyl trafficking.

 

  The ruling invalidated those tariffs and cast doubt on similar IEEPA-based levies on goods from Brazil and India. The court did not clarify whether importers are entitled to refunds, leaving the issue to lower courts. More than 1,500 companies had challenged the duties.

 

Estimates suggest potential refunds could run into billions of dollars. However, Treasury Secretary Scott Bessent, speaking at the Economic Club of Dallas, said tariff revenues in 2026 would remain “virtually unchanged” as the administration shifts to other statutory authorities.

Why the new tariff was imposed

According to a White House fact sheet, the administration considers the US to be facing “fundamental international payments problems”.

It stated:

• A goods trade deficit of around $1.2 trillion in both 2024 and 2025
• A current account deficit of 4 per cent of GDP in 2024, the highest since 2008
• A negative balance on primary income in 2024, the first annual deficit of its kind in decades
• A net international investment position of minus 90 per cent of GDP at the end of 2024

It argues that these trends amount to a “large and serious” balance-of-payments deficit that threatens financial stability, investor confidence and national security.

 

Section 122 allows the President to impose temporary import surcharges of up to 15 per cent for 150 days without prior congressional approval. Any extension would require lawmakers’ consent, a potential hurdle, given opposition from Democrats and some Republicans to elements of Trump’s trade policy. 

What is covered and what is exempt

The 10 per cent ad valorem duty will apply to most imports and be levied in addition to existing customs duties. However, exemptions cover critical minerals, energy products, pharmaceuticals, certain electronics, aerospace goods and selected agricultural items.

 

Goods qualifying for duty-free treatment under the US–Mexico–Canada Agreement will remain exempt. Textile and apparel items covered by the Dominican Republic–Central America Free Trade Agreement are also excluded. Imports already subject to Section 232 tariffs will not face the surcharge in addition to those duties.

 

Trump has also directed the Office of the United States Trade Representative to begin fresh investigations under Section 301, signalling that country-specific tariffs could follow.

 

The administration says the move is aimed at correcting broader economic imbalances rather than protecting specific industries, as it reshapes its trade strategy following the court’s ruling