Not long after the United States Supreme Court ruled against the legality of President Trump’s implementation of reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) by a 6-3 margin on Friday, the White House announced that it would roll out a new tariff, set to take effect on February 24 at 12:01 AM ET.
The IEEPA tariffs were introduced by the White House last April, with drivers for the tariff measures including addressing U.S. trade imbalances, pushing for increased domestic manufacturing, and stemming the flow of fentanyl across U.S. borders from Canada and Mexio.
This new tariff, the White House stated, will be in the form of a 150-day, 10% temporary import duty on most goods entering the United States under Section 122 of the Trade Act of 1974 and address what the Administration describes as serious international payment imbalances and a growing U.S. balance-of-payments deficit. The 10% tariff was subsequently upped to 15% over the weekend by President Trump over the weekend in a social media post but with no official confirmation by the White House at press time.
Reasons the White House cited for this tariff, following the Supreme Court’s decision on Friday, included reducing dollar outflows, encouraging domestic production, creating jobs, and improving economic and national security. And it added that:
the U.S. is running large and worsening current account and trade deficits;
the goods trade deficit reached $1.2 trillion in 2024;
the overall current account deficit rose to 4% of GDP in 2024, the largest since 2008; and
the U.S. net international investment position stands at –$26 trillion (89% of GDP)
The White House stated that various goods are excluded from this tariff, including: critical minerals, energy products, fertilizers not sufficiently produced domestically; some agricultural goods (e.g., beef, tomatoes, oranges); pharmaceuticals and ingredients; certain electronics; passenger vehicles and certain trucks, buses, and related parts; aerospace products; books, donations, and accompanied baggage; goods already subject to Section 232 tariffs; USMCA-compliant goods from Canada and Mexico; and certain textiles and apparel under CAFTA-DR.
President Trump also reaffirmed the suspension of duty-free “de minimis” treatment for low-value imports, meaning those shipments will also face the new duty.
In regards to increasing the temporary 10% tariff to 15%, President Trump said in a social media post that the new tariffs will be effective immediately.
“I, as President of the United States of America, will be, effective immediately, raising the 10% Worldwide Tariff on Countries, many of which have been ‘ripping’ the U.S. off for decades, without retribution (until I came along!), to the fully allowed, and legally tested, 15% level,” he stated. “During the next short number of months, the Trump Administration will determine and issue the new and legally permissible Tariffs.”
United States Trade Representative Jamieson Greer said in a statement issued on Friday that the White House is committed to continue implementing President Trump’s trade policy, noting that prior to Friday’s ruling the White House had told foreign trading partners and the business community that should that if the ruling against the IEEPA tariffs occurred, that there would be alternative tools implemented to address the central issues of the reciprocal tariff program, including: reducing the U.S. global trade deficit in goods; reversing the lack of reciprocity by U.S. foreign trading partners; and incentivizing the reshoring of production to the U.S.
One of the alternative tools cited by Greer, in addition to the temporary 10% tariff, were initiating several investigations under Section 301 of the Trade Act of 1974 to deal with unjustifiable, unreasonable, discriminatory, and burdensome acts, policies, and practices by many trading partners. Other tools mentioned by Greer were continuing ongoing Section 301 investigations and maintaining tariffs currently imposed under Section 232 of the Trade Expansion Act of 1963 and conclude ongoing investigations.
An S&P Global Market Intelligence report observed that the White House has publicly committed to maintaining tariffs as a core element of trade strategy regardless of the court’s ruling, adding it has several alternative mechanisms that could follow the use of Section 122 tariffs for a 150-day period, which would then require congressional extension and leave plenty of time to deploy alternative Section 301 tariffs.
“The U.S. macroeconomic impact of the invalidation of IEEPA tariffs will in part depend on the extent to which the administration can replace them with tariffs authorized under alternative mechanisms,” the firm explained. “The impact on aggregate prices of, say, a 15% average tariff rate is independent of the authorizing statute. That is, to a first approximation, a Section 301 tariff that raises the same amount of revenue as an IEEPA tariff affects top-line inflation the same. If current tariff revenues can be replaced now that IEEPA tariffs have been invalidated, we would not expect to change our inflation forecast. If, however, they cannot be replaced, we would expect less inflation in 2026 and potentially a sooner easing of Federal Reserve policy than we currently forecast.”
Keith Prather, Managing Director, Armada Corporate Intelligence, told LM that the court’s ruling and the White House’s subsequent actions pose a few different questions: How many of the countries with existing agreements will try to void those? How fast can the administration get 232/301 investigations done? Will section 122 or 338 face legal challenges that they can’t overcome?
“I think there was some pre-planning for setting the 122 tariffs at 15% over the weekend—because it matches the negotiated tariff rate for most of the 19 countries that have new legal trade agreements in place,” he said. “The threat for Trump here is that if they don’t honor the negotiated tariff agreement, he’ll stack the legally agreed upon tariff amount with these 122 tariffs for 150 days and then work to get longer-term tariffs in place. Those countries have every incentive to just keep those agreements in place and then let him wave the Section 122 tariffs for those countries. That would leave just a handful of countries that are still running under IEEPA Tariffs. For those under IEEPA, he can impose up to a 50% tariff for 150 days if he wanted to use that lever—and then impose ‘investigations’ under 232/301 that would tie those countries up for a long time. Ultimately, Trump wants the legal trade agreements in place because they supersede the court ruling. Those investigations take some time, that could be a problem for the administration. Legally, the 122 and 338 tariffs will face some legal challenges, but I think most folks believe they have more sticking power in application than IEEPA. Even the Chief Justice [one of the dissenters] had comments that suggested that the President’s options were broad enough that he questioned the rationale for the decision.”
A big question for supply chain stakeholders raised by Prather is: what do they do between now and July 24th when the 150 days under Section 122 ends?
“Do they inbound early to try and use the 122’s, expecting maybe a new wave of higher 232/301’s or even a higher 338 to get imposed…or do they just settle back into a normal replenishment cycle and just deal with what comes (assuming everything is going to end up in the 10-15% tariff range)?” he said. “It probably depends on the product and how much price sensitivity affects sales volumes. Those with high sensitivity are probably worth overengineering inbound strategies, those with more flexibility will probably focus more on inventory management and controlling cost of capital allocations on inventory.”
An analysis from Cleveland-based law firm Benesch, noted that the court’s decision creates uncertainty about the immediate path forward for supply chains, as billions of dollars in duties are now in question and the process for potential refunds remains unclear, while adding that not all tariffs will be impacted since many imposed under other legal authorities, such as Section 232 and 301, remain in effect.
“Now is the time for importers to ensure they maintain thorough records of customs entries and duties paid in 2025, monitor developments on potential future refund procedures, and are prepared for new tariffs under alternative statutes,” the firm said. “Companies can also watch for updates on electronic refund processes and consider submitting comments on other pending customs changes.”
