Trump’s tariff dreams are not dead. But they’ve been put on life support

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Donald Trump has announced a new tariff of 15% on goods entering the US, after the Supreme Court struck down the majority of the levies introduced during his second term.

So what? This is a major blow to Trump’s global trade war. The Supreme Court ruled 6-3 that the president had exceeded his authority by imposing tariffs on most countries, but Trump is determined to continue his flagship economic policy. The ruling

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  comes as a relief for countries subjected to the highest tariffs;

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  creates uncertainty for other US trading partners; and

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  could undermine Trump’s entire fiscal agenda.

Liberation day. Trump imposed the tariffs last year under the International Emergency Economic Powers Act, a 1977 law that gives the president sweeping authority in times of crisis. The levies, which ranged from 10% to nearly 50%, were based on US trade deficits. By a crude calculation, countries that sold much more than they bought received the highest rates.

Commiseration day. The Supreme Court ruled that this was an illegal use of executive power, finding that the ability to enact tariffs during peacetime rests with Congress. It was a strong rebuke from a conservative-dominated institution that has mostly sided with Trump over the last year. Two judges appointed by the president during his first term voted against the tariffs.

Lashing out. Trump called the justices who struck down the levies “unpatriotic” and claimed that the court had been swayed by “foreign interests”. Tariffs on specific industries such as steel, aluminium and cars remain in place because they were imposed under different legislation.

Plan B. Trump also issued a new global tariff of 10%, which he quickly increased to 15%. This was imposed under section 122 of the 1974 Trade Act, an instrument that has never been used before and that the White House claimed empowers the president to “address certain fundamental international payment problems”.

Stopgap. This is a temporary measure, since the rule only allows the president to impose tariffs for up to 150 days. After that, Congress must step in. Trump said he would use this window to work on other “legally permissible tariffs”. This potentially sets up a game of whack-a-mole, with the administration finding new laws to justify its tariffs, which are then subject to legal challenges.

Mixed bag. In the meantime, countries such as the UK, which had secured a tariff of 10%, must pay a higher rate. Other countries, such as Brazil and China, are subject to lower levies.

The rationale. Trump’s tariffs are aimed at reinvigorating America’s industrial heartlands and creating jobs by persuading companies to make their goods in the US. He has also wielded them as a cudgel to extract concessions from other countries, several of which have agreed to buy more American goods and invest in the US economy in return for lower rates.

In reality, the tariffs are a tax on Americans. The Federal Reserve estimates that 90% of the $130bn cost has been shouldered by US businesses and consumers, while the Tax Foundation predicts the tariffs will cost American families $1,300 on average this year. Meanwhile, the US trade deficit for goods hit an all-time high in 2025.

We want our money. More than 1,800 US companies have filed lawsuits seeking refunds for tariff duties, including Costco, Barnes & Noble and Diageo. But the Supreme Court did not rule on whether firms were entitled to them, delegating the issue to a lower court.

Brave face. Trump says that the trade deals his administration has struck with nearly 20 countries should be untouched. But very few of these agreements have been ratified and they could now be renegotiated.

Hot mess. South Korea has said the ruling “nullifies” its tariff, although it did not disown the deal it struck with the US in October, which commits it to investing $350bn in the US. India has delayed plans to send trade envoys to Washington this week to finalise a trade deal.

What’s more… Trump delivers his State of the Union address on Tuesday night in Congress. There he will come face to face with the elected representatives who will determine the future of his tariffs, as well as the six justices who have put that choice in their hands.

Photograph by Mario Tama / Getty Images