This article of mine first appeared in Seatrade Maritime News on 22nd February 2026.
One thought one was “liberated” but now that “liberation” has been taken away. So, what does one do? One still finds other ways to “liberate” oneself.
This is the key takeaway from the US Supreme Court verdict on Tariffs and President Trump’s reaction to it.
On 20th February, in a 6-3 decision in Learning Resources Inc. v. Trump, the US Supreme Court struck down the bulk of President Trump's tariffs, ruling that the International Emergency Economic Powers Act (IEEPA) — a 1977 emergency law — does not authorize the president to impose sweeping import duties. Chief Justice John Roberts wrote for the majority, joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson, while Justices Thomas, Kavanaugh, and Alito dissented.
The ruling specifically invalidates country-by-country "reciprocal" tariffs, which ranged from 34% for China to a 10% baseline for the rest of the world, as well as tariffs tied to drug trafficking enforcement against Canada, Mexico, and China. It leaves in place tariffs on steel, aluminium, auto and other sectors imposed under different laws.
Trade impact of IEEPA Tariffs
The IEEPA tariffs — including the "Liberation Day" reciprocal tariffs — raised the applied U.S. tariff rate by seven percentage points. If left in place, they were estimated to shrink U.S. GDP by 0.3%. The Tax Foundation estimates these tariffs were projected to raise $1.4 trillion over the next decade.
The tariffs inflicted severe harm throughout 2025. Global ocean container volumes to the U.S. fell 14% year over year, while U.S. imports from China fell 28% and exports to China declined 38%. At California's critical ports, soybean exports to China from the Port of Los Angeles fell 80%, with virtually every agricultural commodity exported being affected.
The drug-trafficking and immigration related tariffs on China and Mexico had also complicated the USMCA trades, especially in the auto and energy sectors.
Trump's immediate response
Rather than accept the ruling, Trump announced a 10% global tariff, which he raised to 15% on Saturday, under Section 122 of the Trade Act of 1974 — a different legal authority. What this will do is to take away the “comparative advantage certain countries enjoyed due to the differing tariff rates imposed on Liberation Day and with the trade deals signed thereafter. Now all the countries in the world will have to pay 15% tariffs on the goods being imported into USA. However, these tariffs can only be in place for 150 days absent a congressional extension.
Treasury Secretary Bessent claimed this global tariff and other alternative authorities would "result in virtually unchanged tariff revenue in 2026." So, does that mean business as usual? Not really.
Trump’s potential additional responses
The Trump administration is also looking at imposing tariffs under Sections 232 and 301 of the same Act. Let us look at these sections in brief.
Section 122 — Balance of Payments Authority
This provision gives the President broad emergency authority to impose temporary tariffs when the U.S. faces a serious balance of payments deficit or a significant decline in monetary reserves.
Process:
- The President makes a determination that a balance of payments problem exists.
- Tariffs (or import surcharges) can be imposed unilaterally without prior agency investigation.
- The surcharge is capped at 15% ad valorem.
- Duration is limited to 150 days unless Congress extends it.
- Congress can terminate the action by a majority vote (legislative veto mechanism, though its enforceability has been questioned post-Chadha)
- No formal public comment or hearing process is required — it is essentially an executive emergency power.
President Trump has already “maxed out” on this one by imposing a global tariff of 15% and it will kick in from 24th February for a period of 150 days.
Section 232 — National Security (Trade Expansion Act of 1962, often invoked alongside the 1974 Act)
Technically rooted in the Trade Expansion Act of 1962 but strongly associated with trade remedy law. The process is:
Process:
- The Secretary of Commerce self-initiates or responds to a petition and conducts an investigation.
- Commerce must determine whether imports threaten to impair national security.
- The investigation must be completed within 270 days.
- Commerce submits a report and recommendation to the President.
- The President then has 90 days to decide whether to act on the findings.
- If the President acts, they have broad discretion to impose tariffs, quotas, or other trade restrictions.
- There is no formal requirement for injury to domestic industry in the traditional sense — national security is the operative standard.
- Public hearings and comment periods are held during Commerce's investigation.
- Congress has limited formal ability to override the President's action.
Once again, President Trump can try to fast-track this process and with limited congressional oversight or approval requirements, this can come in place within weeks or latest months. There is no upper limit on the tariff rates or a maximum period (like in case of S 122).
Section 301 — Unfair Trade Practices
This is the primary U.S. tool for addressing unfair foreign trade practices (e.g., intellectual property theft, discriminatory policies, violations of trade agreements).
Process:
- Initiation — A petition is filed by an interested party, or the U.S. Trade Representative (USTR) self-initiates an investigation.
- Determination of initiation — USTR decides within 45 days whether to initiate.
- Investigation — USTR investigates whether the foreign country's act, policy, or practice is "unreasonable," "unjustifiable," or "discriminatory" and burdens U.S. commerce.
- Consultations — USTR must request consultations with the foreign government; if a trade agreement is involved, formal dispute settlement may be pursued simultaneously.
- Public hearings — Interested parties can submit comments and testify.
- Timeline — USTR must reach a determination generally within 12 months of initiation (18 months if consultations are ongoing under a trade agreement)
- Determination & action — If USTR finds a violation or burden, the President (acting through USTR) can impose tariffs, trade restrictions, or other measures.
- Monitoring — USTR continues to monitor compliance and can modify or terminate actions.
This is the section under which the proposed escalated port fees were imposed and once again, it can be fast-tracked and there is no upper limit on tariffs or maximum duration. Congress has extremely limited role to play in this.
What about the Trade Deals already agreed?
In the past one year, the U.S. has struck deals or frameworks with roughly 15+ individual countries/blocs in the past year, or 40+ countries if you count EU member states individually. The basis of these deals was the reduction in the “Liberation Day” tariffs for these countries and now that those very tariffs have been held illegal and unenforceable, the trade deals should in theory “collapse.” However, that is unlikely to happen. First, these countries do not want to antagonize President Trump by walking out on an agreed deal. Second, from 24th Feb 2026, there will be 15% tariff in any case and though the countries may try to bring down their tariffs to that level, in case they pay a higher number currently, they are fully aware that US will find ways to push more tariffs their way eventually.
The challenge will be for those countries who are currently having 10% tariff rate such as UK. They will now be paying 5% more due to the global tariff rate of 15%. The countries that have now signed a deal with USA will find it a mixed blessing. They will face a much more “bitter” Trump administration on the other side of the table but at the same time “Liberation Day” tariff threat is off the table.
The first country with a signed trade deal and first country negotiating a deal will be the pioneers in this “new negotiation climate” fostered by this US Supreme Court ruling. They may set the benchmarks that others may follow.
The Refund Question — A Potential "Mess"
One of the biggest unresolved issues is what happens to the estimated $160+ billion in IEEPA tariff payments already collected. The case has been remanded to the U.S. International Trade Court to deal with refunds. If fully refunded, it would erase nearly three-fourths of the new revenues from Trump's tariffs.
The Supreme Court was notably silent on the mechanics of refunds. Trump himself suggested he has no intention of honoring refunds proactively, and Justice Kavanaugh wrote in dissent that the process is "likely to be a 'mess.'"
Even if the refund is going to come, things are going to be extremely complicated!
Let me illustrate the challenge with a simple mind-map.
After the “Liberation Day,” the parties had two options:
Option 1 – Not deal with each other.
Option 2 – Do the deal and ship the cargo.
If Option 1, then no issue. If Option 2, then there are two further options:
Option 1 – Seller paid the tariff and it was reflected in the deal price.
Option 2 – Buyer paid the tariff.
If Option 1, then no issue. If Option 2, then there are two further options:
Option 1 – Buyer did not pass the additional cost to the consumer.
Option 2 – Buyer passed the additional cost to the consumer.
If Option 1, then Buyer will claim refund and matter ends. If Option 2, then there are two further options:
Option 1 – Buyer does not pass the refund received to the consumer.
Option 2 – Buyer passes the refund received to the consumer.
If Option 1, this will deliver huge windfall gains to the US importing companies and If Option 2 is exercised, then it is going to be a huge exercise by the companies but not an impossible one!
Impact on Shipping, Trade and Supply Chains
A potential surge in imports into USA.
The ruling arrives at a pivotal moment for supply chain planning. Over the past year, U.S. freight markets were affected by a prolonged rate downturn driven by reduced container volumes, leaving many companies operating with leaner inventories. With the IEEPA tariffs gone, importers — especially smaller businesses — may rush to restock before the .
Rate volatility ahead.
Higher volumes could strain capacity, especially in trucking and rail, leading to spot rate volatility due to knock-on delays and congestion that will build up.
Sourcing reconfiguration
Companies that spent 2025 shifting sourcing away from China and toward nearshoring may now reverse course. Businesses may reevaluate lanes to capitalize on lower costs, though challenges persist as lean inventory strategies may linger due to uncertainty. However, it is important that the sellers try to write into their US contracts that any future changes to tariffs will have to be absorbed by the buyers and the same applies to ship owners/operators and charterers, respectively.
Level playing field restored – for now!
The Liberation Day tariffs had given an advantage to some countries compared to others due to lower tariff rates and thus the trade was moving towards the countries which held such an advantage. This is now gone and therefore, we may see (at least for the time being), the original trade flows come back as the “comparative tariff” advantage is gone.
Ongoing uncertainty.
Critically, this is not a clean resolution. As mentioned earlier, the administration will impose additional commodity-based tariffs under other statutes, which could trigger another round of exemption requests and negotiations, prolonging sourcing paralysis well into 2026.
The Bottom Line for Trade
The ruling is historic — before Trump, no president had ever used IEEPA "to impose any tariffs, let alone tariffs of this magnitude and scope." For global trade, it offers relief but not certainty. The administration is pivoting to alternative legal tools, Trump has already signed a new 15% global tariff, and Congress could yet be asked to formally authorize broader measures. For shippers, importers, and supply chain managers, the watchword right now is cautious optimism: costs should ease, trade flows with Asia should recover — but the policy landscape remains in flux.