Editor's note: ‬He Weiwen is a senior fellow at the Center for China and Globalization. The article reflects the author's opinions and not necessarily the views of either CGTN or Center for China and Globalization.

The US Supreme Court struck down US President Donald Trump's global tariff based on the International Emergency Economic Powers Act (IEEPA) on February 20, 2026, ruling it unlawful as IEEPA does not include any tariff change power to the president. It reiterated that the tariff power belongs to the Congress, as stipulated explicitly in the US Constitution. 

IEEPA, enacted in 1977, has a clear objective to monitor and control financial activities, including asset freezing and trading bans, to safeguard the national economic security. The Act has nothing to do with tariffs. Hence, the "reciprocal tariff" maneuver by the Trump Administration over that whole past year was scrapped overnight.

It was a landmark success of the US Constitution and its clear design of power boundaries and balance among legislature, executive and juridical departments, and thus an effective valve on Trump's unlimited power actions. It was, more importantly, a significant setback to Trump Administration in its frenzied unilateralism, tariff abuse, and its challenge to the whole world. It also gave a relief to the world trade mechanism and world trade as a whole. The EU and UK immediately expressed cautious welcome and the world stock markets also responded with a moderate rebound.

Trump, furious at the US Supreme Court ruling, immediately attacked the chief judge of the United States John Jr. Roberts in person, and vowed to continue his wrong tariff agenda. He announced on the same day a flat 10 percent tariff globally, with exceptions on critical minerals, pharmaceuticals, selected daily necessities, etc. for 150 days. Less than 24 hours later, the tariff rate was changed to 15 percent the following day, on the legal basis of Section 122 of the Trade Act 1974.

As a result, there has been little change in the US global tariff arena. The "reciprocal tariff" by force of IEEPA was ultimately 17.3 percent on average globally, with 15 percent to EU, Japan and other partners with trade agreements, very close or the same as the current 15 percent worldwide. The previous tariffs on automotive products, steel, aluminum, copper, etc. under Section 301 or 232, remained unchanged. The fundamental difference lies in the effective period. The current global 15 percent tariff under Section 122 is effective for only 150 days, and must obtain the Congress permission for extension, while the "reciprocal tariff" is permanent.

The immediate announcement of 15 percent global tariff under Section 122 has proved eloquently two fundamentals: First, at the decisive failure of IEEPA tariff, Trump must maintain political support and announce a substitute immediately for keeping his constituency and shrinking support in the Republicans. Second, and more importantly, Trump's fundamental trade policy— American First, unilateralism, and subversion of world multilateral trading system does not and will not change at all. As Section 122 tariff is valid only for 150 days. There will be a heated struggle in the Congress from now on for the extension permission, with Trump forcing the Republicans standing with him and the Democrats stepping up opposition.

The latest decision on 15 percent tariff worldwide raises serious legal questions. Section 122 of the Trade Act of 1974 was enacted at the background of the de-link of dollar to the gold in 1971 which led to dollar devaluation and the first trade deficit since the end of World War II. Section 122 stipulates that under these two circumstances, the president can impose maximum 15 percent temporary tariff worldwide for maximum 150 days, to check the trend. Since the dollar delinked with gold in 1971 and dollar devaluation in 1973, there has been no condition necessitating such a measure. Section 122 has rarely been invoked in recent decades.

Trump's imposition of global 15 percent tariff does not meet the threshold of Section 122. First, the US does not suffer from a sudden huge international balance of payment deficit. It recorded a trade deficit in 2025 of around $900 billion in 2025, but huge surplus in financial account ($1.27 trillion in 2024). Hence, the overall BOP was in balance.

The huge merchandise trade deficit does not meet the threshold of Section 122 as well. The chronic huge merchandise trade deficit has been for four decades, nothing urgent. In 2025, the US merchandise trade deficit ratio (deficit by imports) was 35 percent, lower than that in 2000 (36.3 percent), a quarter century ago, still lower than that four decades ago (38.9 percent in 1987). Section 122 was not triggered in either 1987 or 2000. How can a lower deficit ratio justify a trigger?

There is no urgent dollar devaluation situation as well. The broad dollar index stood at around 117 in mid-February, and was about 120 on August 13, 2025, or 2.8 percent down over past six months, comfortably normal.

The rampant IEEPA tariff in 2025 has been futile in general. It did not change the US huge trade deficit status. In the first two months of this year, the US exports fell to the lowest level since August in 2025, while its imports picked up to the highest level since April last year when the "reciprocal tariff" was announced. As a result, the merchandise trade deficit hit $1.2 trillion for the year, a new record. 

It did not drag down exports of its major trading partners. China, with its exports fall to the US easily offset by its robust export growth to ASEAN and BRI partners, saw its global exports up 5.5 percent over 2025, almost the same speed as the 5.9 percent growth in 2024 before Trump reentered the White House. The EU also had a global export growth, and Japan, despite export fall to the US, even saw its export worldwide at record high in 2025. According to UNCTAD, the world merchandise and service trade had grown 7 percent in 2025, breaking $35 trillion barrier, a new record high.

The overall world economic outlook has been little affected as well. The IMF World Economic Outlook in January 2026 put the 2025 global growth estimate at 3.3 percent, virtually the same as in 2024, and put its 2026 estimate at 3.3 percent as well.

A clear trend floating up is the acceleration of the regional, cross-regional or bilateral trade arrangement to offset the US tariff and trade restriction shocks. Canada, the EU, China, India, ASEAN and CPTTP members are stepping up various trade agreement or FTAs, with the US increasingly sidelined.

Similar to the tariffs under IEEPA, the new 15 percent global tariff under Section 122 also raises legal and economic questions, it does not serve the American economic interest or the American people's benefit. Instead, it is only a political narrative of Trump for his constituency base only.

The prospect in the coming months is almost clear. On the one hand, Trump and his team will continue to push on their unilateral tariff and trade restriction agenda vehemently, despite the US Supreme Court ruling. The world economy and trade will continue to suffer strong headwinds. On the other hand, and equally sure, the Section 122 tariff and other headwinds will get nowhere as well. Washington is no longer in a far dominant position in world trade, IEEPA tariff yielded little result in 2025, so will Section 122 tariff in 2026.