Ten months ago, Donald Trump launched what he dubbed his ‘reciprocal tariffs’ at an event in the White House Rose Garden. The whole event, broadcast live around the world, had the feel of an early evening Saturday light entertainment TV show. The president, casting himself as host, told some jokes and interviewed some members of the public (in this case, factory workers) before unveiling a large poster showing the new import tax rates by country. Officials in other governments and global business leaders were reduced to staring at hastily taken screenshots to try and work how the new tariffs would affect them.

The tariffs were, in the main, much higher than investors, or just about anyone else, had expected and prompted a sell-off in financial markets. Faced with a falling dollar, rising yields on US government debt and a tanking stock market, the administration paused the tariffs for 90 days, struck a series of detail-light ‘trade agreements’ with other countries, and eventually put in place a tariff-package that, while not quite as severe as that initially threatened, still represented the highest level of US protectionism since the 1930s.

On Friday 20 February, the Supreme Court ruled that the entire charade was illegal. The 1977 International Emergency Economic Powers Act (IEEPA), which was used to bring in both the reciprocal tariffs of Liberation Day and some earlier hikes in tariff rates on China, Mexico and Canada, does not – in the view of the court – grant powers to the executive. While some of the administrations tariffs – such as those on steel, copper, aluminium and autos and autoparts – still stood, the vast majority were struck down.

The president’s immediate response, at an angry White House press conference, was typically contradictory. After branding the decision ‘a disgrace’ and calling the justices who backed it ‘fools’, the president essentially claimed that it made no real difference to his governing agenda as he had alternative tools available. On 20 February, he imposed a 10 per cent global tariff on imports using the authority of the 1974 Trade Act and, the following day, increased that to 15 per cent. Although when the tariff actually came into force, it was at the originally threatened 10 per cent level. Under the 1974 Act, these new duties can remain in place for 150 days. Over the coming months, the administration aims to put in place a new tariff regime, although mostly via more cumbersome processes that typically require investigations before being enacted.

The most immediate economic impact of the ruling, and the administration’s cobbled-together response, is a large injection of uncertainty back into the global macroeconomy. The post-pause US tariff regime may have been high, but it was also relatively stable. Both US importers of goods, and foreign exporters, can no longer be sure exactly what rates they will face when the 150 days of Trade Act tariffs come to an end. That matters. Empirical research has found that elevated uncertainty tends to be associated with weaker corporate investment and lower hiring.

The threatened new 15 per cent global tariff would create a somewhat perverse set of winners and losers abroad. The United Kingdom, for example, a close US ally that is no way a major component of the US trade deficit, will see the tax levied on its exports to the United States increased. By contrast China, whom the US regards as a strategic competitor, will see a large cut – at least in the short term. In general, the big winners are Asian manufacturing states such as Thailand, Malaysia and Vietnam, and the major losers are traditional allies such as South Korea and the European Union. The future of all those ‘trade agreements’ struck during the 90-day pause is now unclear. The 10 per cent tariff currently in force results in fewer direct losers overseas.

The domestic impacts on America’s own economy are even harder to unravel. For a start, exactly what happens to the $140bn or so collected over the last year under the now struck-down tariffs? The most likely outcome is a large payday for trade lawyers as companies sue the government seeking refunds. The pattern of refunds will no doubt provoke plenty of ill-feeling. In many cases, an importer facing a new tariff will have passed on the cost to its own customers, but any repayments will flow to the importer rather than to the customers who faced higher prices. Investors in US bonds may become a little twitchy if it looks like tariff revenues are going to be materially lower than anticipated, especially as those tariff revenues were one justification given for Trump’s tax cuts.

The largest impact of the Supreme Court ruling, though, will come in the realm of geopolitics rather than economics. It will take the Trump Administration time to rebuild their tariff framework, more legal hoops will have to be jumped through, and some not-too-rigorous ‘investigations’ will have to be carried out. But a tariff regime similar, if not identical, to that which existed on the morning of 20 February will no doubt be put back in place eventually. What the White House has really lost, now that the (IEEPA) tariffs have been ruled against, is flexibility and the ability to move quickly.

It is hard to overstate how central tariffs, and the threat of tariffs, have been to the working of Trumpian statecraft in his second term. In January 2026, the White House’s strategy to acquire Greenland was to threaten 25 per cent tariffs on any nation that stood in its way. In 2025, when Colombia refused to accept US deportation flights, it was threatened with new tariffs. Brazil was threatened with a 50 per cent tariff for ‘persecuting’, in the view of the Trump Administration, former president Bolsonaro. India was told it would face new tariffs if it continued to import Russian oil.

Tariffs were once thought of as primarily a tool of economic policy, something used – often misguidedly – to protect domestic industries, raise revenues or manage trade deficits. For President Trump they have just as often been used to serve political rather than economic ends. They have been a coercive tool designed to change the behaviour of other states rather than to manage economic relations. The Trump Administration will be able to rebuild its tariff walls, but the loss of its ability to move quickly and set tariff rates by White House diktat, will mean it has to find new ways of engaging with other governments.