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The United States (US) court's move to invalidate the tariff structure could reshape the policy landscape and alter the trajectory of uncertainty, SBI Research said.
The report noted that 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 added that 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. "Unscrapping of the tariff structure by the Court(s) can upend uncertainty going forward while jurisdictions need to put in place counter intuitive negotiation to position themselves strategically in the intermittent period where ultimate power lies with a delicately balanced US Congress," the report noted. 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. However, the executive has quickly invoked Section 122 of the 1974 Trade Act to impose new 10% global tariff on all imports to US for 150 days (note: this will be the first time Section 122 authority has ever been used). This temporary measure will start from 24 Feb 2026 and ends in July should the Congress not ratify the imposition. Under the trade Act, President can impose temporary import surcharges (up to 15%) or quotas to fix US balance of payment issues. It lasts up to 150 days max, unless Congress extends via legislation. The new 10% tariff has exemptions, including goods from Canada and Mexico that comply with the USMCA, as well as specific, already-in-place national security tariffs. It is expected that during this time, the Administration would complete investigations and levy tariffs using Section 301 and Section 232, the report noted. SBI Research noted that with respect to tariffs in particular, the Court's decision might not prevent President from imposing most if not all of these same sorts of tariffs under other statutory authorities. 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, it said. (ANI)
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