What we know (and don’t know) about President Trump’s latest tariff announcements
It was just hours after the US Supreme Court ruled against the US administration’s emergency tariffs from ‘Liberation Day’ (here’s our original reaction piece) before President Donald Trump announced a new round of tariffs. As expected, the U.S. administration is invoking Section 122 of the Trade Act of 1974, which authorizes tariffs of up to 15% for 150 days to immediately address “international payment problems.”
The tariffs will expire after 150 days unless Congress extends them. However, the president could, in theory, allow the surcharge to expire, declare a new emergency, and restart the 150-day period. This would create a de facto perpetual tariff instrument. While official White House communications said the tariff would be 10% by February 24, Trump said a day later that he would keep the tariff at 15%. It should be noted that these tariffs were not subject to the order of the Supreme Court.
However, the use of Section 122 could lead to new legal difficulties for Trump. In fact, Section 122 goes back to the era of the gold standard and fixed exchange rates. It is a trade instrument that has practically never been used, as the fixed exchange rate regime was abolished after the passage of the Trade Act of 1974. It would not be easy to argue that the US currently has a balance of payments crisis because, by definition, the balance of payments is always in balance.
The new tariffs are just smoke and mirrors for other options.
Given that the latest tariffs could also be legally challenged, this could be a measure to buy some time for another tariff option: Section 301 of the 1974 Act. This section 301 addresses violations of unfair trade practices or trade agreements but requires a more thorough investigation.
How does the new tariff relate to the existing tariff?
The new tariffs will not come on top of the existing sectoral tariffs (Section 232), which currently apply to steel, aluminium, wood, automobiles and certain motor vehicles. Also, articles entered duty-free under the United States-Mexico-Canada Agreement (USMCA) are exempt from the surcharge. Finally, parts and components used in civil aircraft are exempt from the new tariffs.
What about a bilateral ‘agreement’?
After the Independence Day announcements and threats, many countries negotiated and agreed to trade agreements with the US administration. Although these deals were made through the now repealed emergency tariffs, they are bilateral arrangements and therefore not directly affected by the Supreme Court’s decision. However, some deals – such as those with Switzerland or India – made explicit reference to contingency tariffs, as the new tariff rates were set as a reduction from those contingency levels. As the statutory reference tariff rate has now disappeared, these deals may have to be redone.
In the case of the US-EU trade agreement, things are even more complicated. The European Parliament suspended approval of the EU’s commitments under the agreement as the Greenland dispute escalated. It is now unclear whether Parliament will push for a full renegotiation of the deal. That said, the US administration will likely rely on sectoral tariffs and Section 301 measures to pressure the EU back to the negotiating table.
The US macro outlook was unchanged.
The realized rate of tariffs, calculated as US customs duty revenue divided by the value of goods imported into the US, averaged 10.9% through the second half of 2025. This is lower than the 17.3% rate that the Yale Budget Lab suggested was the average tariff rate applied during the previous years of announced import tariffs and based on the announced import tariff rate applied in the country. Reasons for the disparity include import substitution—a move to lower-tariff sources, such as a sharp reduction in imports from China, an increase in tariff-exempt high-tech imports, better compliance with the USMCA, and potential tariff avoidance through re-export through third-party, lower-tariff countries.
Average listed and received tariff rates.
Source: Yale Budget Lab, Macrobond, ING
While a new universal tariff rate of 15% should theoretically mean a slightly lower average tariff rate, it may be that a simpler tariff structure would lead to a higher actual rate. Reduced complexity leaves less room for ambiguity and fraud and reduces incentives to resume trade through third countries. Note, too, that the tariff also applies to a significant number of exemptions, such as high-tech products and critical minerals. Consequently, for now, we assume that actual tariff revenue rates remain slightly above 10%.
While the decision left open the possibility of refunding nearly $130 billion in tariffs collected under the International Emergency Economic Powers Act (IEEPA), it did not offer guidance on how that would be achieved. The administration has warned that it faces the risk of years of litigation. This casts additional doubt on the prospects of paying the $2000 tariff dividend that President Trump has projected for Americans.
In inflation-adjusted terms, rising import prices and a 1.1% year-over-year reading for the latest primary goods indicate that corporate America is bearing most of the cost of the tariffs. We remain nervous about possible further increases in food prices, but the reality is that this is happening so slowly that falling housing rents, moderating wages and falling gasoline prices give inflationary forces more opportunity. As such, we are not proposing to change our inflation or growth forecasts on the back of these announcements, with two 25bp Federal Reserve calls remaining in June and September.
Tariffs are here to stay.
Friday’s Supreme Court ruling sent a strong signal about the limits of presidential power. This can be seen as proof that checks and balances still work in America. However, we do not think President Trump will use this decision as a backdoor option to back down on his tariff agenda. In contrast, announcements since the Supreme Court’s decision strongly confirm that Trump has no intention of removing his “most beautiful word” from the English dictionary. Uncertainty is back, and the risk of escalation is higher now than it was a year ago, given the latest muscle flexing by European leaders.
Disclaimer: This publication has been prepared by ING for purely informational purposes, regardless of the means, financial situation or investment objectives of a particular customer. The information is not an investment recommendation, nor is it investment, legal or tax advice or an offer or solicitation to buy or sell any financial instrument. Read more