The Supreme Court’s 20 February decision struck down many Administration tariffs, cutting the average effective tariff rate on US imports from about 13.6% to 6.4%. The reduction was temporary.
After a proclamation last Friday, the President used Section 122 powers to apply a 15% tariff across the board. This pushed the effective rate back to about 12%, restoring most of the earlier tariff load.
Tariff Scope And Exemptions
The global 15% measure was limited to goods that had already faced reciprocal tariffs. Exemptions remained for USMCA-compliant products, and wider exclusions were added for civil aircraft and parts.
Some tariffs may be lowered, but broad trade liberalisation is not expected to return. The US is expected to adjust its tariffs to keep leverage in talks and to avoid worsening debt projections, while legal and policy uncertainty continues.
The rapid reversal from the Supreme Court’s decision to the White House’s new 15% tariff confirms the administration’s commitment to a protectionist stance. We should ignore the brief dip in tariff rates last week as a temporary legal hiccup, not a change in policy. This signals that betting on a return to lower tariffs is a losing strategy for the near future.
This persistent uncertainty is a clear signal to prepare for higher market volatility. When looking back at the initial tariff escalations in 2025, we recall the VIX index spiking above 20, and Friday’s whiplash shows that playbook is still active. Therefore, buying protection or taking long positions on volatility indices through options or futures is a prudent move for the coming weeks.
Currency And Cross Border Implications
For currency traders, this development solidifies the case for a strong, or at least stable, U.S. dollar, as trade barriers remain high. However, the specific exemptions for USMCA partners suggest a relative value trade could be promising. We might see the Mexican Peso and Canadian Dollar outperform other currencies that lack such favorable access to the U.S. market.
We must also consider the government’s fiscal situation, which provides a floor for these tariffs. With the latest CBO projections from January 2026 showing federal debt continuing to climb past 110% of GDP, the revenue from tariffs is politically essential. Last year’s tariff collections, which approached $125 billion, are now a critical budget component that the government cannot easily give up.
In the equity markets, this means focusing on the clear winners and losers. Derivative strategies should target companies with international supply chains, particularly in retail and manufacturing, which will continue to face margin pressure. Conversely, the specific carve-out for civil aircraft and parts creates an opportunity for bullish positions on that select group of companies.
