Trump Imposes Global 10% Tariff Under Section 122 After Supreme Court Strikes Down IEEPA Tariffs
The US Supreme Court, in a 6-3 ruling in Learning Resources, Inc. v. Trump, struck down President Trump's tariffs imposed under the International Emergency Economic Powers Act (IEEPA), holding that the Act does not authorise the President to impose tariffs.
Chief Justice John Roberts wrote that the Constitution "very clearly" vests taxing power — including tariffs — in Congress, not the President; IEEPA's words "regulate" and "importation" cannot be read to include the power to tax.
Within hours, Trump signed a new executive order imposing a 10% global tariff on all countries under Section 122 of the Trade Act of 1974, effective February 24, 2026, which he subsequently raised to 15%.
Trump stated that "nothing changes with India," as the India-US interim bilateral trade agreement (BTA) had established a reciprocal tariff of 18%, which remains higher than the new global baseline.
IEEPA: International Emergency Economic Powers Act (1977)
The International Emergency Economic Powers Act was enacted by the US Congress in 1977 to grant the President authority to regulate international commerce in response to an "unusual and extraordinary threat" to national security, foreign policy, or the economy. It was historically used for financial sanctions, not tariffs.
The Supreme Court's ruling that IEEPA cannot be used for tariffs represents a landmark check on executive power over trade policy, forcing the administration to seek alternative legal authority — specifically Section 122 of the Trade Act of 1974.
Section 122 of the Trade Act of 1974
Section 122 of the Trade Act of 1974 authorises the President to impose a temporary import surcharge of up to 15% ad valorem for a period not exceeding 150 days to address "large and serious" balance-of-payments deficits. Unlike IEEPA, this is a trade-specific statute with explicit tariff authority but narrower scope and built-in time limits.
The shift from IEEPA to Section 122 imposes structural constraints on the tariff regime — the 15% cap and 150-day time limit mean the administration faces a deadline for either securing Congressional authorisation or finding yet another legal basis.
India-US Trade Relations: Bilateral Trade Agreement Framework
India and the US reached a framework for an interim Bilateral Trade Agreement (BTA) in February 2026, establishing reciprocal tariff treatment and purchasing commitments. This represents the first formal bilateral trade deal between the two countries after decades of negotiations.
The BTA's 18% reciprocal tariff rate for India is higher than the new global 15% tariff under Section 122, meaning the BTA terms remain the operative framework for India-US trade regardless of the global tariff action.
- Supreme Court ruling: 6-3 in Learning Resources, Inc. v. Trump (February 20, 2026)
- IEEPA tariff revenue collected before invalidation: over $130 billion
- New global tariff: 10% initially, raised to 15% within a day
- Legal basis for new tariff: Section 122, Trade Act of 1974
- Maximum duration: 150 days (without Congressional extension)
- Maximum rate under Section 122: 15% ad valorem
- India-US BTA reciprocal tariff: 18%
- India's purchasing commitment under BTA: $500 billion over 5 years
- India-US bilateral trade (FY 2024-25): approximately $128 billion