Trump just hiked tariffs from 10% to 15%. Here’s how the tariffs will work and what’s next for the world

Hours after the US Supreme Court struck down Donald Trump’s signature economic policy, the American President signed a proclamation using an alternative law — Section 122 of the Trade Act of 1974 — to impose a new 10% temporary tariff on goods from all countries. On Saturday, he announced on Truth Social that this 10% rate would be increased to 15%, the maximum permissible tariff limit under the new provision. Here’s a look at the extent to which the US top court constrained Trump’s powers, how this alternative tariff route will work, and why Trump turned to it. ## What tariffs did the US Supreme Court strike down? The court essentially took a battering ram to Trump’s tariff wall erected using the International Emergency Economic Powers Act (IEEPA) — a law no previous President has used to impose tariffs. The conservative-majority court effectively restored the US Congress’s primacy in trade policy. It invalidated Trump’s country-specific reciprocal tariffs and fentanyl-linked duties imposed on imports from major trading partners. The ruling significantly constrained the US President’s ability to weaponise tariffs, forcing the federal administration to find other ways to go about implementing his trade agenda. To be clear, the ruling specifically affects Trump’s IEEPA tariffs. Tariffs on key goods such as steel and aluminium under other provisions are not affected. ## What is Section 122? Hours after the Supreme Court ruling, Trump issued a proclamation to impose a 10% global tariff on almost all imports to the US under a rarely-used provision known as Section 122 of the Trade Act of 1974. Subsequently, he hiked the rate to 15%. This Section allows the temporary imposition of 15% tariffs for up to 150 days in response to “fundamental international payments problems”. Alongside this section, two other provisions — Section 232 of the Trade Expansion Act of 1962 and Section 301 of the 1974 Trade Act — that are already in use and have firmer legal grounding will remain in place, the White House clarified after the SC ruling. Section 232 of the Trade Expansion Act of 1962 allows tariff actions on national security grounds. These have already been deployed in the case of steel, aluminium, semiconductors and other products — and the Trump administration is looking to expand the list. Read more about Section 122 tariffs in our detailed explainer here. The three major implications First, the new tariffs put most countries on an even keel, at least for now, instead of the differential tariffs that Trump had slapped on each country using the now illegally-applied 1977 law, the IEEPA. This could undermine America’s recent trade deals with the UK, Japan, EU, Malaysia, Indonesia, Vietnam, and the one under negotiation with India. Now, all countries — Japan, South Korea, Vietnam and India — will face a 15% tariff rate. The earlier 10% rate initially announced by Trump on Friday was baseline tariff under IEEPA, irrespective of a deal. Second, Section 122 allows the temporary imposition of 15% tariffs for up to 150 days in response to “fundamental international payments problems”. While the use of these tariffs will buy some time for the Trump administration, the problem for them is that the provision has never been used and, like IEEPA, will face legal challenges. Also, what happens after 150 days is unclear. At that point, the administration would have to go to the US Congress, which means this solution is temporary. Third, Trump and his administration would now have to painstakingly put his tariff wall back together, brick by brick. The blanket use of IEEPA is not an option now. While the use of Section 122 is temporary, the use of Section 232 and Section 301 offers much less flexibility and warrant formal investigations before they are levied. That would dent Trump’s method of using tariff threats and forcing negotiations with affected trading partners at gunpoint. But the need for investigations and findings can make levies harder to challenge once they are in place, but would take time to run its course. Given that tariffs remain Trump’s signature policy, he will resort to all possible means to route back his tariff wall, in whatever limited manner, a government official said. The removal of IEEPA levies should lower America’s effective tariff rate by about half, according to calculations by the Yale University’s Budget Lab. US Treasury Secretary Scott Bessent has said that combining Section 122 tariffs with enhanced Section 232 and Section 301 tariffs “will result in virtually unchanged tariff revenue in 2026”, essentially making up for the loss of the IEEPA tariffs. Section 232 has already been deployed in the case of steel, aluminium, semiconductors and other products, and the administration could take recourse to this even more. Reshaping the global trade landscape Partner countries may now reconsider — or abandon — agreements negotiated under tariff pressure, according to Delhi-based trade think-tank GTRI’s Ajay Srivastava. “About 55% of India’s exports to the US will be freed from the 18% reciprocal duty and revert to standard MFN (most favoured nation) tariffs”. Section 232 tariffs, however, remain, which includes 50% on steel & aluminium and 25% on certain auto components. Roughly 40% of exports — including smartphones, petroleum products, and medicines — remain exempt for the world. The takeaway for India is that “this (IEEPA) ruling reshapes the global trade landscape”. “It must prompt a review of India’s trade deal with the United States. Reciprocal Tariffs were the US leverage. With that leverage gone, the negotiations become useless. Trade policy is entering a new phase — one defined less by executive action and more by legal limits, legislative authority, and strategic recalibration,” according to Srivastava. Anil Sasi is the National Business Editor at The Indian Express, where he steers the newspaper’s coverage of the Indian economy, corporate affairs, and financial policy. As a senior editor, he plays a pivotal role in shaping the narrative around India's business landscape. Professional Experience Sasi brings extensive experience from some of India’s most respected financial dailies. Prior to his leadership role at The Indian Express, he worked with: The Hindu Business Line Business Standard His career trajectory across these premier publications demonstrates a consistent track record of rigorous financial reporting and editorial oversight. Expertise & Focus With a deep understanding of market dynamics and policy interventions, Sasi writes authoritatively on: Macroeconomics: Analysis of fiscal policy, budgets, and economic trends. Corporate Affairs: In-depth coverage of India's major industries and corporate governance. Business Policy: The intersection of government regulation and private enterprise. Education Anil Sasi is an alumnus of the prestigious Delhi University, providing a strong academic foundation to his journalistic work. Find all stories by Anil Sasi here ... Read More