NEW DELHI, Feb 22 : As the United States (US) court announced the invalidation of the tariff structure, a latest report by SBI Research said it could reshape the policy landscape and alter the trajectory of uncertainty.
“Unscrapping of the tariff structure by the Court(s) can upend uncertainty going forward, while jurisdictions need to put in place counterintuitive negotiation to position themselves strategically in the intermittent period where ultimate power lies with a delicately balanced US Congress,” the report said.
Countries may need to adopt counter-intuitive negotiation strategies to position themselves during the interim period, as ultimate authority over tariffs rests with a finely balanced US Congress, it said.
The interaction between inter-sovereign treaties and actions by juristic persons on tariff matters could create complexity, if not disruption, in determining an effective tariff framework.
Notably, the US Supreme Court issued a landmark decision that invalidated the POTUS/Administration’s use of imposing tariffs under the International Emergency Economic Powers Act (IEEPA), 1977.
The act had never before been used by a President to impose tariffs and does not find much footing in peacetime. The executive has quickly invoked Section 122 of the 1974 Trade Act to impose new 10 per cent global tariff on all imports to the US for 150 days (note: this will be the first time Section 122 authority has ever been used). This temporary measure will start on 24 February 2026 and end in July, should the Congress not ratify the imposition.
Under the Trade Act, the President can impose temporary import surcharges (up to 15%) or quotas to fix the US balance of payment issues. It lasts up to 150 days max, unless Congress extends it via legislation. It is expected that during this time, the Administration would complete investigations and levy tariffs using Section 301 and Section 232, the report noted.
The new 10 per cent tariff has exemptions, including goods from Canada and Mexico that comply with the The U.S. – Mexico – Canada Agreement (USMCA), as well as specific, already-in-place national security tariffs. With respect to tariffs in particular, the Court’s decision might not prevent the President from imposing most if not all of these same sorts of tariffs under other statutory authorities, SBI Research said.
A second issue is the decision’s effect on the current trade deals. Because IEEPA tariffs have helped facilitate trade deals worth trillions of dollars-including with foreign nations from China to the United Kingdom to Japan, the Court’s decision could generate uncertainty regarding various trade agreements. That could be difficult.
(UNI)
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