Click the icon to add a specified price to your Dashboard list. This makes it easy to keep track on the prices that matter most to you.
The administration of President Donald Trump has imposed a 15 percent ad valorem surcharge on certain imports with effect from February 24, 2026, following the U.S. Supreme Court’s ruling that his earlier tariff measures were unconstitutional. The surcharge was initially set at 10 percent for a period of 150 days before being raised to 15 percent. According to the administration, the measure is not a direct replacement for the previous tariffs but a temporary mechanism to continue duty collection, deemed necessary to address the balance-of-payments deficit.
The latest Presidential Action issued by the Trump administration states: “After considering the information, opinions, and recommendations provided by senior officials, I find fundamental international payments problems that significantly harm United States national security and economic interests. Therefore, special measures are required to restrict imports and address those problems. Accordingly, I impose a temporary import surcharge of 10 percent, later raised to 15 percent, ad valorem, for a period of 150 days on certain articles imported into the United States, effective February 24, 2026.”
The Supreme Court’s decision to strike down the reciprocal IEEPA tariffs could materially reshape the trade policy landscape. In response, U.S. President Donald Trump swiftly announced the introduction of a 15 percent across-the-board tariff, following an initial 10 percent surcharge that was raised to 15 percent on February 22. Under the new structure, the surcharge applies broadly to most imports, with several key exceptions. Products already subject to Section 232 duties — such as steel, aluminium, copper, lumber, and automobiles — are excluded to the extent that existing Section 232 tariffs remain in force. Approximately 1,100 product codes are fully exempt from the surcharge.
Significance of US economy
The United States plays a pivotal role in shaping the global economy but faces various threats to its own economic stability and national interests. At times, the country encounters fundamental international payments problems, such as large and persistent balance-of-payments deficits, an imminent and significant depreciation of its currency in foreign exchange markets, or broader international balance-of-payments disequilibrium. These challenges can, among other things, undermine the nation’s ability to finance its spending, erode investor confidence in the economy, and disrupt financial markets.
Special import measures designed to restrict imports, such as surcharges and quotas, are key tools for protecting the United States’ economy and national security. In certain circumstances, such measures may be necessary to address fundamental international payments problems. Given the seriousness of these challenges and the importance of import restrictions as economic, national security, and foreign policy instruments, federal law empowers the President to take action through surcharges and other special import restrictions to address such problems.
Trade deficit
Officials confirmed that special import measures are required to restrict imports and address balance-of-payments problems. For instance, the United States runs a deficit in selling goods and services overseas, as reflected in the “balance on goods and services” reported by the U.S. Bureau of Economic Analysis (BEA). It has also recently recorded quarterly deficits in returns on investment and labour. In addition, the country runs a deficit in voluntary transfers, such as remittances, as captured in the “balance on secondary income.” In other words, the United States runs a trade deficit and does not currently earn net income from the capital and labour deployed abroad.
The United States runs a substantial trade deficit. The large, persistent, and serious annual U.S. goods trade deficit has grown by more than 40 percent over the past five years alone, reaching US$ 1.2 trillion in 2024. In 2025, the U.S. goods trade deficit remained at approximately US$ 1.2 trillion. The effects of this deficit are significant, and it contributes to the fundamental international payments problems facing the United States.
Current account deficit
The annual balance on U.S. primary income turned negative in 2024 for the first time since at least 1960. From 1960 to 2023, the United States consistently recorded a surplus in its annual primary income balance. That positive balance served as a stabilising force for the country’s balance-of-payments position, even in the face of large and persistent trade deficits. In 2024, however, the primary income balance turned negative and therefore ceased to act as a counterweight to the trade deficit in the U.S. current account.
The United States recorded a current account deficit (CAD) equivalent to 4 percent of gross domestic product (GDP) in 2024, nearly double the average of about 2 percent that prevailed between 2013 and 2019, and higher than levels seen from 2019 to 2023. As a share of GDP, the 4 percent deficit marked the largest annual CAD since 2008. Meanwhile, the U.S. net international investment position (NIIP) continues to deteriorate. According to the Bureau of Economic Analysis (BEA), the NIIP stood at negative 90 percent of GDP at the end of 2024.
This represents a sharp decline from the average of negative 41 percent recorded between 2010 and 2020. Such a position is highly atypical for any country, particularly the United States. In both absolute dollar terms and as a share of GDP, it ranks among the most negative net international investment positions of any developed economy. Since the current account is a primary driver of changes in the NIIP, the unusually large negative position underscores the scale and seriousness of the United States’ balance-of-payments deficit.
Trump’s ‘unconstitutional’ tariffs
The U.S. Supreme Court ruled that former President Donald Trump’s sweeping tariff measures were unconstitutional, holding that the executive branch had exceeded its statutory and constitutional authority by imposing broad trade levies without clear congressional approval. The Court observed that while the president has limited powers to adjust tariffs under specific trade and national security statutes, such authority cannot be exercised in a manner that effectively bypasses Congress’s constitutional mandate to regulate commerce with foreign nations.
The ruling underscored the principle of separation of powers, reaffirming that trade policy — particularly the imposition of wide-ranging tariffs with significant economic consequences — requires explicit legislative backing. The decision is expected to have far-reaching implications for U.S. trade policy and could reshape the legal framework governing future tariff actions by the White House.
Winners and losers
As a result of the U.S. Supreme Court ruling, the additional ad valorem duties imposed pursuant to the International Emergency Economic Powers Act (IEEPA) under various Executive Orders shall no longer remain in effect and, as soon as practicable, shall cease to be collected, according to a recent Executive Order. However, all other actions — including measures taken to address previously declared national emergencies that do not impose additional ad valorem duties under IEEPA or do not involve steps necessary to implement such duties — will remain unaffected by this order.
The shift from the earlier IEEPA-based regime to a flat 15 percent tariff clearly creates winners and losers among the top U.S. import partners. The biggest beneficiaries are countries that were previously subject to high IEEPA rates, as those elevated surcharges have now been replaced by a significantly lower, uniform tariff. From a regional perspective, the removal of IEEPA tariffs is a clear positive for Asia. China and India stand to benefit the most, with tariff reductions of 7.1 percentage points and 5.6 percentage points, respectively. For these countries, the new 15 percent rate is considerably more favourable than the steep, country-specific IEEPA tariffs they had faced earlier.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
