(UNITED STATES) — President Donald J. Trump announced on Saturday, February 21, 2026, that he will immediately raise the global tariff on imports from 10% to 15% after a Supreme Court ruling the previous day narrowed his tariff authority under the International Emergency Economic Powers Act.
Trump made the announcement in a Truth Social post, calling the court’s decision “ridiculous, poorly written, and extraordinarily anti-American” and saying the new rate moves to the “fully allowed, and legally tested, 15% level.”
The increase raises fresh cost pressure for companies that import into the United States, with the higher duty expected to flow into contract pricing, supply chain decisions and retail prices as firms decide how much to absorb versus pass on.
Trading partners also face a broader, nondiscriminatory measure rather than a country-by-country tariff, meaning it applies widely rather than singling out one country, subject to statutory carve-outs and listed exemptions.
The Supreme Court on Friday, February 20, 2026, issued a 6-3 ruling striking down Trump’s authority to impose sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA), a decision that pushed the administration to pivot to a different statute.
Trump signed a proclamation the same day imposing a temporary ad valorem tariff on most imports under Section 122 of the Trade Act of 1974, framing the move as a response to “fundamental international payment problems” such as balance-of-payments deficits.
Within a day, Trump moved from the proclamation’s 10% rate to the maximum allowed under Section 122 without Congressional approval after the initial window, underscoring how quickly the administration shifted legal footing and policy design after the Supreme Court ruling.
The change matters for importers because it ties the tariff’s durability and limits to Section 122’s guardrails, rather than the broader emergency powers Trump had relied on under IEEPA before the court’s decision.
IEEPA has served as a tool presidents use to respond to declared national emergencies with economic measures, but the Supreme Court ruling constrained the administration’s ability to use it for broad global tariffs.
Section 122 of the Trade Act of 1974, by contrast, is aimed at addressing international payment and balance-of-payments concerns, and it carries conditions that shape how far a president can go without Congress.
One of those constraints is that Section 122 requires tariffs to be “nondiscriminatory,” which limits country-specific exemptions beyond statutory carve-outs and pushes the policy toward a global tariff structure.
Another constraint is its temporary nature. The authority permits an initial period that ends unless Congress acts, an element that adds a political deadline to what would otherwise be an open-ended tariff policy.
The statutory maximum rate also interacts directly with Trump’s decision to move to 15%, because the White House described that level as the upper bound permitted under Section 122 during the initial period without congressional approval.
Even with the shift in legal authority, the new duty does not replace other trade measures already on the books. It stacks on top of existing duties, including tariffs imposed under Section 232 and Section 301, which remain in effect.
Section 232 tariffs are tied to national security rationales and have covered categories such as steel, aluminum, and autos, while Section 301 tariffs are linked to findings of unfair practices, creating a layered duty structure for many products.
That stacking effect can produce higher all-in duty costs than the headline global rate suggests, depending on a product’s classification, country of origin, and whether it already faces separate Section 232 or Section 301 measures.
The proclamation and related policy details also lay out exemptions that mirror prior approaches, a feature that can reshape exposure across supply chains and product lines.
Exemptions include critical minerals, metals for currency/bullion, and energy products, according to the policy details provided with the Section 122 action.
Other carve-outs include pharmaceuticals, agricultural goods, and electronics, broad categories that can cover a wide range of inputs and finished products depending on how goods are classified at the border.
Goods that are USMCA-compliant from Canada and Mexico also fall under the exemption framework described alongside the Section 122 tariff.
For companies that import into the United States, exemptions can be central to compliance planning and pricing because eligibility often depends on classification, origin, and documentation that must match customs requirements.
The administration signaled that exemptions may be applied through customs processes, echoing earlier tariff programs where importers sought relief by fitting products into defined carve-outs.
Treasury Secretary Scott Bessent framed the tariff shift as a revenue-neutral adjustment for the year, despite the higher rate.
Bessent said the measures, combined with Sections 232 and 301, will maintain “virtually unchanged tariff revenue in 2026.”
Trump, in announcing the increase, also pointed to further action beyond the global tariff, saying he would pursue investigations into trading practices of unspecified countries for possible higher targeted tariffs.
The countries and sectors that could be affected by those investigations, as well as the timing and legal vehicle for any targeted actions, remained unspecified, though the administration referenced examples “e.g., potentially Japan, EU, Canada.”
The policy goals, as described in White House statements, include rebalancing trade, protecting US workers, and pressuring partners into deals covering over half of global GDP.
Those stated goals sit alongside the legal and practical constraints of Section 122, which can force a choice between seeking congressional involvement, finding other statutory authorities, or letting the temporary tariff window expire.
A Yale Budget Lab analysis dated February 20, 2026, offered estimates for revenue and economic effects under a scenario in which 10% Section 122 tariffs expire after the initial period, a key assumption that may not match policy if the administration extends or alters the measure.
Under that scenario, Yale Budget Lab projected revenue over 2026-35 of $1.3 trillion conventional and $1.1 trillion dynamic, after growth offsets of $185 billion.
The analysis also projected a short-run consumer price increase of +0.6%, which it framed as equivalent to $800/household loss in 2025 dollars.
By the end of 2026, the Budget Lab estimated unemployment would rise +0.3 percentage points under its assumptions.
Over the long run, it projected the US economy would be 0.1% smaller, or $30 billion/year in 2025 dollars, and it said global GDP would be slightly lower, hitting Canada/China/Mexico hardest.
Yale Budget Lab also modeled a scenario in which the tariffs extend beyond the initial window, finding that impacts would intensify, with consumer prices at +0.9% and a $1,200/household loss, alongside a larger GDP hit.
The Budget Lab identified sectors likely to face particular pressure from the tariff structure, listing metals, electrical equipment, and motor vehicles, and adding apparel if the tariff is extended.
Because the analysis assumed a 10% rate during the Section 122 period, it does not directly quantify the effect of Trump’s move to 15%, though its scenarios underline how outcomes can shift depending on duration and scope.
For businesses, the tariff’s interaction with existing Section 232 and Section 301 duties can complicate pricing decisions and contract terms, especially for firms that import intermediate inputs used in US manufacturing.
Some importers may attempt to shift sourcing, redesign products, or adjust shipping schedules, while others may focus on ensuring goods qualify for carve-outs such as USMCA compliance or category-based exemptions like energy products or pharmaceuticals.
Trading partners, meanwhile, must weigh how to respond to a nondiscriminatory global tariff that applies broadly, while also watching for signs that Trump’s investigations could lead to higher targeted tariffs on specific countries or practices.
The administration’s rapid pivot from IEEPA to Section 122 after the Supreme Court ruling also sets a procedural marker for what comes next, because any continuation beyond the initial period would require congressional involvement to extend or reshape the measure.
Stakeholders are likely to watch for new proclamations, agency guidance, customs instructions, and legislative action as the temporary authority approaches its endpoint and as Trump decides whether to pursue higher tariffs tied to investigations.
Bessent’s assertion that the shift keeps revenue “virtually unchanged tariff revenue in 2026” offered the administration’s clearest numeric framing of the near-term fiscal effect, even as companies brace for higher landed costs from the 15% rate.
Trump Plans to Raise Global Tariffs to 15% Using Ieepa and Section 122
Following a Supreme Court ruling narrowing executive emergency powers, President Trump increased global tariffs to 15% using Section 122 of the Trade Act. These nondiscriminatory duties apply broadly but include carve-outs for USMCA-compliant goods and essential sectors. The administration frames this as a revenue-neutral rebalancing of trade, while economic analyses suggest potential increases in consumer prices and unemployment if the measures persist beyond the initial temporary window.
