Trump imposes 10% global tariff in response to US Supreme Court ruling

The US Supreme Court declared Donald Trump’s ‘Liberation Day’ tariffs illegal on the morning of 20 Feb. but hours later the US president responded by levying fresh tariffs.

On 2 April 2025 Trump introduced tariffs on US trading partners that ranged from 10% to 50%. Trump invoked the International Emergency Economic Powers Act to bypass legislators in Congress and the Senate and levy the tariffs via an executive order.

But now the Supreme Court has ruled 6-3 that the tariffs were unlawful because that act doesn’t give the president authority to impose tariffs.

“The decision is significant first and foremost because it reinforces the balance of powers, which has been fundamental to the political and economic stability of the United States since its founding,” said Cayman-based economist Julian Morris.

There is also a large potential economic impact with Goldman Sachs estimating that US importers have paid US$170 billion in Liberation Day tariffs. However, the ruling does not prevent Trump from levying other types of tariffs. “The Supreme Court ruling is actually limited in scope,” said John Sitilides, geopolitical strategist and former US State Department diplomacy consultant.

“The ruling held that a president may not use the International Emergency Economic Powers Act to impose emergency tariffs but is not prohibited from imposing fees not covered under the act, and may continue to deploy particular industry tariffs, such as on steel, aluminium and automobiles, as available under other laws enacted by Congress,” said Sitilides.

Trump strikes back

Trump immediately responded by using another legal mechanism, Section 122, to impose a new tariff of 10% on all US trading partners. Trump’s move means “much of the original tariff regime could be reinstated temporarily”, said Robert Whelan, portfolio manager at NCB Capital Markets (Cayman).

However, Whelan said there’s a key nuance. “Section 122 tariffs are typically temporary (150 days) and designed for balance-of-payments issues, so markets are monitoring whether they can actually replicate the economic impact of the struck-down tariffs.”

Uncertainty reigned in the markets following the day of tariff chaos. US Treasury bonds saw a modest price drop, with investors worried that if the US government refunds tariffs, it will be forced to issue more bonds and increase supply. The issue of refunds is yet to be decided in the US courts.

In contrast, US share prices rose on the news. This reflected hopes of an injection of cash into companies from refunds, and also a perception that Trumps tariff policy, which is perceived as negative to GDP growth, will be weakened.

Analysts differed on the impact this would have on the US economy. “We can expect to see continued financial uncertainty, trade disruptions and a Trump presidency that insists on conditionally granting foreign companies and countries the privilege to access US markets in accordance with broader administration domestic economic, foreign policy and trade rebalancing objectives,” said Sitilides.

Morris believed the US Supreme Court ruling will have a positive impact in the long run. “The decision itself should reinforce the perception that the US remains governed by separation of powers and the rule of law and thus is likely, long-term, to retain its status as the world’s most dynamic and innovative large economy.”

“Net impact is probably slightly bullish near term, but mixed longer term,” said Whelan. “Companies reliant on imports, such as retail, autos and manufacturers, will see short-term benefits but long-term trade uncertainty remains.”