Market News
Trump’s New 15% Import Surcharge: Market & Sector Impacts
Securities.io maintains rigorous editorial standards and may receive compensation from reviewed links. We are not a registered investment adviser and this is not investment advice. Please view our affiliate disclosure.
President Donald Trump and the US Supreme Court continue to joust over his second-term tariff policies. This week, the court ruled that he lacked the authority to pass such sweeping economic measures. In response, he initiated the dropped tariffs under another executive branch power. Here’s what you need to know.
What Tariffs Do and Why They Matter
Tariffs work by making foreign products more expensive than domestic options. This added cost comes in the form of a tariff tax. Designed as a tool for governments to use to reduce demand for foreign products, tariffs have now become a controversial issue that continues to alter the market conditions.
Recent Supreme Court Ruling
This week’s ruling upholds earlier judgments by lower courts and an appeals court. The court voted against Trump’s tariff in a 6-3 decision. Interestingly, Justices Roberts, Sotomayor, Kagan, and Jackson were joined by two Trump appointees, Barrett and Gorsuch, in opposing the president’s unchecked tariff powers.
The Dissent: Why Three Justices Backed IEEPA Tariffs
On the other side of the debate, you have Thomas, Alito, and Kavanaugh. This group filed a dissent on the action, arguing that the president has the right and powers under the current emergency acts to make such a decision.
Why Did the Court Rule Against the Tariffs?
Discussing their decision, Chief Justice Roberts discussed how the International Emergency Economic Powers Act was meant to provide a way for the president to alter the economy in rare scenarios evolving from foreign threats.
Specifically, the act, which entered law in 1977, grants the president the ability to make direct economic actions against adversaries in the interest of national security. In the past, it was used by President Carter during the Iran hostage crisis to apply pressure.
Source – UNCTAD
Since that time, this executive power has been gradually expanded, with other presidents invoking it against Russia and China. The judges argue that the use of this order to apply a global tariff hike is out of its intended scope as it makes massive economic changes, and it sidesteps Congress directly.
The judges argue that Trump invoked the act to do exactly this, rather than curb a direct threat. They also note that the sheer size of the economic ripples from this maneuver makes it fall under congressional powers.
Controversial Approach
The real issue focuses on what constitutes an emergency and who gets to dictate when a president can decide to use these powers, for what reasons, and for how long. These crucial questions are now at the forefront of the discussion thanks to growing concern over the president’s second-term tariff policies.
Second-Term Tariff Policies
Trump stated that he would use tariffs to balance out trade deficits and other economic imbalances with the US before his reelection. Since that time, he has gone to great lengths to leverage these financial tools. Here’s a look back at his recent tariff decisions and how nations reacted.
Swipe to scroll →
| Date | Action | Rate / Scope | Authority | What happened next |
|---|---|---|---|---|
| Feb 1, 2025 | Mexico/Canada tariffs announced; China tariff added | 25% (MX/CA), 10% (CN) | IEEPA | Retaliatory measures and legal challenges accelerate |
| May 2025 | First major court ruling blocks IEEPA-based tariff program | Broad IEEPA tariff program | CIT | Case proceeds on appeal |
| Aug 2025 | Appeals court affirms ruling (en banc) | IEEPA does not authorize tariffs | Federal Circuit | Administration seeks Supreme Court review |
| Feb 2026 | Supreme Court decision (6–3) | IEEPA cannot authorize tariffs | Supreme Court | IEEPA tariff pathway closes; policy pivots to other statutes |
| Feb 2026 | Temporary import surcharge announced | Up to 15% (time-limited) | Trade Act §122 | Market focus shifts to duration, exemptions, and legal durability |
Trump began his tariff reforms on Feb 1, 2025, when he announced that he would impose 25% tariffs on Mexico/Canada imports. This news was also followed by a 10% tariff on China. The president imposed the tariff, citing concerns over the flow of drugs like fentanyl into the country. Only a few days later, he raised steel and aluminum tariffs to 25%. This maneuver caused instant financial backlash.
Retaliatory Measures
Trump’s decision to abruptly impose tariffs on some of the countries’ foes and allies has led to these nations taking retaliatory measures. China has been in Trump’s crosshairs for some time. The nations responded to his tariffs with reciprocal actions, applying 15% tariffs on key products like coal.
Mexico and Canada also fought against these tariffs. Notably, Mexico initiated its Plan B tariffs, which target key US industries like Pork and produce. Also, Canada placed a 25% tariff on all US steel, aluminum, meat, dairy, and more.
Liberation Day
On Apr 2, 2025, the Trump administration launched its Liberation Day campaign. This maneuver included creating a 10% global baseline tariff for all US trade partners. Notably, there were some nations that were hit harder, like China, which was hit with additional tariffs amid a growing tariff war.
Federal Courts Block IEEPA-Based Tariffs
The first major legal setback came in May 2025, when the U.S. Court of International Trade (CIT) ruled that IEEPA did not authorize the administration’s broad tariff program. The U.S. Court of Appeals for the Federal Circuit (en banc) later affirmed that conclusion in August 2025. The dispute ultimately reached the Supreme Court, which ruled 6–3 in February 2026 that IEEPA does not authorize tariffs.
New Round of Tariffs
In July 2025, the Trump administration announced a new round of tariffs. This round would be a widespread effort that imposed new tariffs on 69 US trade partners. Interestingly, the administration chose not to reduce its tariffs for its neighbor, Canada, leading to more political turmoil.
The administration has also used tariffs to apply pressure on countries not following its guidance. For example, the US imposed an added 25% tariff on all Indian goods because the country still purchases low-cost oil from Russia.
Trump Replaces IEEPA Tariffs With Trade Act Section 122
Not to be deterred from his tariff goal, Trump took to Truth Social to announce yet another round of tariffs. This go-around, the president seeks to impose a 15% tariff on all US trading partners under another executive power.
Trade Act of 1974
This time, he invoked section 122 of the Trade Act of 1974. This law provides the president with the ability to apply up to 15% tariff for up to 150 days without congressional approval. These decisions enabled the administration to achieve the same goals while bypassing any corners regarding IEEPA-based duties.
Exemptions
Interestingly, this round of tariffs excludes some crucial sectors in the market. For example, steel, autos, beef, and more. It also provides some nations with exemptions due to previous deals. As such, the new tariffs represent a mixed bag of results. For some nations, it’s a reduction, while for others, it raises their rates.
Trump’s Latest Comments on the Tariff Fight
In remarks reported on Feb 23, 2026, Trump signaled he is not backing away from tariffs despite the Supreme Court ruling, describing the decision as a temporary setback rather than a strategic reversal. He framed the shift to Trade Act Section 122 as a “plan B” that preserves the core objective of pressuring trade partners and encouraging more domestic production.
Trump also indicated that if the temporary import surcharge expires or faces new legal challenges, the administration would continue searching for other statutory pathways to keep duties in place. The tone of the message was blunt: tariff policy remains a central lever of the administration’s economic agenda, and he expects trading partners to renegotiate or absorb higher costs while U.S. firms accelerate reshoring plans.
How the Trade Act of 1974 Differs from the IEEPA
There are some key differences between these executive powers worth noting. For one, the Trade Act specifically lists the ability to impose 15% tariffs, whereas the IEEPA has no mention of tariffs.
Additionally, the Trade Act of 1974 has a 150-day limit. In comparison, the IEEPA has no preset time restraints. These acts also differ in their purpose. Section 122 was designed to deal with payment deficits, while IEEPA is an emergency power that is used mostly for sanctions.
Swipe to scroll →
| Feature | IEEPA | Trade Act of 1974 (Section 122) | Why it matters to markets |
|---|---|---|---|
| Primary purpose | Emergency economic powers, typically sanctions | Address “fundamental” international payments problems | Different triggers and justifications affect durability |
| Tariff authority | No explicit tariff language | Explicit authority for up to 15% import surcharge | Clear statutory text can reduce legal ambiguity |
| Time limit | No preset limit | Up to 150 days | Shorter runway tends to increase uncertainty and repricing |
| Typical use cases | Country-specific sanctions and financial restrictions | Temporary import surcharge as a macro-stabilization tool | Broader tariff use tends to hit more sectors at once |
Markets React
The market’s reaction to the withdrawal and then reinsertion of tariffs has been mixed. Before the initiation of the new tariffs, the market showed positive growth. This growth was due to the fact that investors anticipated a return to traditional trade economics.
Risk assets and rates have moved as investors reprice legal durability and timing. Headline decisions can spark short-lived relief rallies, but uncertainty tends to return quickly when replacement tariff authorities and exemption lists come into focus.
Sector Winners
There are some sectors that will benefit much more from the Trump administration’s trade tariffs. For one, Domestic U.S. manufacturing will definitely experience a boost. You can see this growth when you zoom into domestic steels, where Nucor (NUE -0.7%), Steel Dynamics (STLD +1.31%), and Cleveland-Cliffs (CLF +1.97%) stock prices continue to rise following the news.
Interestingly, the new tariffs exclude key pharmaceuticals and Biotech firms like Vertex (VRTX +1.35%), Lilly (LLY +3.85%), and Pfizer (PFE +1.24%). These companies avoid all tariffs because they set up domestic manufacturing facilities. This is exactly the action that Trump hopes to spur with his tariffs.
Rare Earths and Defense
The rare earth and defense markets saw mixed results, as these sectors are built on a model that integrates trade restrictions on competitors like China. As such, the removal and restitution of tariffs caused slight fluctuations in the market but nothing major, as the announcement that tariffs would remain shored up these industries’ domestic advantages.
What Happens Next for Trade Policy and Markets
The Trump administration seems determined to leverage tariffs in any way possible. It sees these taxes as a smart way to rebalance the economy and spur domestic productivity. However, the world’s economy is more complicated than ever, and the slightest effects can ripple into major economic consequences.
As such, there’s a strong focus on the effects of these tariffs and how/why they were instituted in the first place. Consequently, you can expect to see a lot more debate regarding the legality and effectiveness of these tariffs moving forward.
Investor Takeaways:
- SCOTUS closed the IEEPA tariff pathway; future tariffs hinge on other statutes (e.g., Trade Act §122, Section 232, Section 301).
- Section 122 is time-limited, which can amplify volatility versus durable tariff regimes.
- Expect sector dispersion: domestic pricing power vs. import-cost exposure becomes the key filter.
- Refund litigation risk is now a major headline driver for importers and retailers.
The Supreme Court Upholds Ruling on Trump Tariffs | Conclusion
The jury is still out on the effectiveness of Trump’s tariffs and what the long-term effects of these taxes will be, both economically and politically. No matter how far they need to dig into the rule book to find executive powers, you can expect to see this administration stick to its tariffs-first strategy for the foreseeable future.
Learn about other interesting market developments here.
