The concept of US reciprocal tariff policy emerged during Donald Trump’s second-term trade agenda. It was based on the idea that the United States should impose tariffs equivalent to those faced by American exports in foreign markets. This marked a sharp departure from traditional multilateral trade practices that emphasise negotiated tariff schedules under the World Trade Organisation framework.

The policy was largely implemented in 2025 under emergency powers granted by the International Emergency Economic Powers Act, a law originally intended for national security crises rather than routine economic disputes. Trump argued that persistent trade deficits and what he described as unfair foreign tariffs constituted an “extraordinary threat” to the US economy.

As a result, sweeping duties were imposed on imports from nearly all major trading partners. These included variable rates for specific countries, with China facing particularly high duties that at times exceeded 80 percent.

The US reciprocal tariff programme quickly reshaped global trade patterns. It triggered retaliatory measures from major economies such as China and the European Union, disrupted supply chains, and increased import costs for American businesses and consumers.

At its peak, the policy generated more than 130 billion to 175 billion dollars in tariff revenue.

However, it also created widespread legal challenges within the United States, particularly over whether the President had constitutional authority to impose such sweeping duties without congressional approval.

The Supreme Court ruling and its legal implications

In February 2026, the US Supreme Court delivered a landmark 6 to 3 decision declaring the US reciprocal tariff regime unlawful. The court ruled that the President lacked authority under the emergency powers law to impose broad tariffs on trading partners. Chief Justice John Roberts emphasised that tariff powers constitutionally belong to Congress, and the emergency law did not grant the President authority to impose sweeping import duties.

This ruling had several immediate legal consequences. First, it invalidated most of the tariffs imposed under the emergency framework. Second, it raised the possibility of massive refund claims from companies that had paid billions in duties. Third, it established a precedent limiting unilateral executive control over trade policy.

The decision effectively ended the legal foundation of US reciprocal tariff measures, reinforcing congressional authority over international trade.

Immediate relief for global trade partners

The ruling was widely welcomed by trading partners and industry groups worldwide. Many countries saw it as a major step towards restoring stability in global trade relations. For example, India’s exporters gained immediate benefits as duties on over half of their exports to the US were eliminated.

Similarly, Bangladesh’s garment sector experienced reduced policy uncertainty because the ruling removed the risk of sudden tariff increases imposed under emergency authority. Economists note that the invalidation of US reciprocal tariff measures helped restore predictability, which is crucial for global supply chains and long-term trade planning.

In broader terms, the ruling sent a strong signal in favour of multilateralism at a time when unilateral trade actions had been increasing globally.

Ongoing policy turbulence

Despite the court decision, uncertainty remains high. The ruling does not eliminate all presidential tariff powers. It only restricts the use of emergency legislation. Within days of the decision, Trump announced plans to impose new global tariffs of up to 15 percent under a different trade law provision that allows temporary duties for 150 days.

This indicates that US reciprocal tariff tensions may continue in different forms. Experts warn that such legal and policy shifts could prolong uncertainty in global trade negotiations and complicate supply chain planning.

Strengthening global rule-based trade

One of the most significant long-term effects of the ruling is institutional rather than economic. It reinforces the rule-based framework of international trade. The decision underscores that major economic policies must follow legal procedures and democratic oversight. This aligns closely with global trade governance principles under WTO rules.

The ruling also reduces fears that unilateral tariff actions could become a permanent feature of international trade. As a result, many analysts believe the judgement will encourage greater reliance on negotiated trade agreements rather than unilateral measures.

Market and fiscal consequences

The invalidation of US reciprocal tariff measures also poses serious economic challenges.  One major concern is the potential fiscal impact of refunding tariffs already collected. Estimates suggest that refund claims could reach up to 175 billion dollars. Such repayments could strain the US treasury and create administrative challenges.

Additionally, global markets may experience short-term volatility due to uncertainty over future US trade policies.

Opportunities for trade diversification

With the removal of US reciprocal tariff barriers, global supply chains may shift again. Countries previously disadvantaged by high duties could regain competitiveness in the US market.

This could lead to increased trade flows, especially for developing economies reliant on exports.

For example, analysts suggest that South Asian exporters, including Bangladesh, may benefit from improved market access.

Strategic tensions remain

Although the ruling reduces tariff tensions, geopolitical trade conflicts are unlikely to disappear.

The United States may continue to use other legal tools to impose targeted tariffs for national security or anti-dumping reasons.

Moreover, political debates within the US over protectionism versus free trade remain deeply polarised.

This means the global trade environment will likely remain uncertain.

Towards predictable global trade

In the long term, the Supreme Court ruling may contribute to a more stable global trade environment.

By limiting unilateral executive action, it reduces the risk of sudden tariff shocks.

It also encourages greater reliance on legislative processes, which tend to be slower but more predictable.

This could strengthen confidence among investors and international businesses.

What lies ahead for global trade

The future of US reciprocal tariff policy will depend on several factors.

Congressional involvement in trade policy is likely to increase following the ruling.

At the same time, the US administration may continue exploring alternative legal avenues to impose tariffs.

Globally, the ruling may encourage countries to pursue negotiated trade agreements rather than retaliatory tariff wars.

Overall, while the decision creates short-term uncertainty, it strengthens the long-term foundation of rule-based global trade.

The US Supreme Court’s decision declaring the US reciprocal tariff regime illegal marks a turning point in international trade. It limits unilateral executive authority, restores legal clarity, and offers immediate relief to global exporters. At the same time, ongoing policy shifts and alternative tariff strategies may prolong uncertainty in the near term.

Ultimately, the ruling reinforces the importance of legal oversight, multilateral cooperation, and predictable trade rules. In an era of rising protectionism, this decision could play a crucial role in shaping a more stable and balanced global trading system.