US: Tariff reset shapes Dollar outlook – NBC

National Bank of Canada’s (NBC) Angelo Katsoras and Jocelyn Paquet analyze how the Supreme Court ruling and subsequent White House response reshape US trade policy. They note the effective tariff rate briefly fell before a new 15% Section 122 tariff restored most of the prior burden. The report argues the US has likely passed peak tariff levels, but sustained trade restrictions will persist.

Court ruling and Section 122 reshape tariffs

"The Supreme Court’s February 20 decision to invalidate many of the Administration’s tariffs temporarily reduced the average effective rate on U.S. imports from roughly 13.6% to 6.4%. That relief, however, was short-lived."

"Following a proclamation last Friday, the President invoked Section 122 authority to impose a 15% across-the-board tariff, lifting the effective rate back to approximately 12% and largely restoring the previous trade burden."

"Further proof that the United States is now in peak-tariff territory can be seen in the response to the court ruling. Although the administration announced a global 15% tariff, its application was limited to products previously subject to reciprocal tariffs. Exemptions for USMCA-compliant goods were maintained, and an expanded carve-out was introduced for civil aircraft and parts, highlighting the political and economic constraints that now limit the scope for further tariff escalation."

"Although some tariffs may be reduced, it is unlikely that the United States — or other countries — will return to the era of fully liberalised trade seen in recent decades. In the short term, the US is expected to adjust its tariff strategy to preserve its negotiating leverage with trading partners and prevent its debt projections from deteriorating further. The Supreme Court’s ruling has reshaped the legal landscape, but trade policy uncertainty persists."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)