Trump Increases Across-the-Board Tariff Rate to 15 Percent

On Saturday, U.S. President Donald Trump said that he would raise the United States' global baseline tariff rate to 15 percent in order to compensate for the suspension of the country-by-country tariffs he enacted under the International Emergency Economic Powers Act (IEEPA), which have been tossed out by the Supreme Court. The new tariff hike takes advantage of a never-before-used power under Section 122 of the Trade Act of 1974, which lets the president raise tariffs to a maximum of 15 percent for up to 150 days in the event of a "large and serious balance-of-payment deficit."

On Friday, Trump declared a Section 122 global tariff of 10 percent, with exclusions for certain strategic goods like critical minerals, components for defense manufacturing. Though the president announced a hike from 10 percent to 15 percent over the weekend, there were no immediate signs that the increase went into effect.

The previous IEEPA tariff regime was targeted at individual countries, and the administration used changes in tariff levels to extract concessions - for example, convincing India to moderate its purchases of Russian oil, with reduced tariffs as a reward.

Before the Supreme Court decision, the most favorable tariff rate that the administration was willing to allow its closest allies was 10 percent. Now that best-case scenario is below the baseline for all countries, regardless of concessions made.

The Office of the U.S. Trade Representative (USTR) is at work on legal ways to resurrect the previous tariff regime by alternative means. The USTR can investigated countries for unfair trade practices and take countervailing action using Section 301 of the Trade Act; though not as swift or as flexible as IEEPA, Section 301 can be used to rebuild the previous tariff arrangement, Trade Representative Jamieson Greer says.

"So even though the Supreme Court struck down tariffs under one authority, tariffs under other national security elements remain in place," Greer told CBS on Sunday. "And during that time [the next 150 days], we're going to conduct investigations that can allow us to impose tariffs if it's justified by the investigation. So we expect to have continuity in the president's tariff program."

In the meantime, across-the-board Section 122 tariff will have an effect on importers and on foreign manufacturers in many verticals. When including Friday's announcement of a 10 percent Section 122 tariff, the average tariff rate for all U.S. imports comes to 13.7 percent, according to the Yale Budget Lab, down from 16 percent under the now-defunct IEEPA tariff regime.

America's closest allies are among the nations most affected by the changing tariff rates. Australia and the UK, which had negotiated for a 10 percent rate, will see tariffs on their exports go up again. UK businesses view the sudden shifts unfavorably, the British Chamber of Commerce's trade chief told BBC.

"There is a weariness about the constant changes, the lack of any clarity and certainty in terms of tariffs, and therefore the prices that companies can charge for the goods in terms of customers in the US," said the chamber's head of trade policy, William Bain, speaking to BBC.