New Tariffs Imposed After Landmark Court Decision
In a much-anticipated decision handed down Feb. 20 , the U.S. Supreme Court struck down the Trump administration’s sweeping global tariffs.
The court’s 6-3 ruling determined that the tariffs imposed by the administration under the International Emergency Economic Powers Act were unconstitutional.
While removal of the tariffs provides welcome relief for beleaguered companies and consumers, it also introduces a new layer of uncertainty for future U.S. trade policy.
The court’s ruling applies only to tariffs imposed using the IEEPA, with President Trump ordering new levies shortly after the decision was released.
Based on a Yale Budget Lab analysis, the court’s decision will bring the effective tariff rate in the U.S. to 9.1% from 16.9%.
Despite that significant reduction, the figure still represents the highest tariff rate the nation has seen since 1945, outside of last year.
‘Welcome News’
Business groups applauded the court’s decision, with the U.S. Chamber of Commerce calling it “welcome news for businesses and consumers.”
“Over the past year, the chamber has been working with small and midsize businesses around the country that have seen significant cost increases and supply chain disruptions as a result of these tariffs,” said Neil Bradley, chamber executive vice president and chief policy officer.
“Swift refunds of the impermissible tariffs will be meaningful for the more than 200,000 small business importers in this country and will help support stronger economic growth this year.
“We encourage the administration to use this opportunity to reset overall tariff policy in a manner that will lead to greater economic growth, larger wage gains for workers, and lower costs for families.”
The court’s ruling has significant economic implications, with the federal government collecting more than $200 billion in tariffs over the last year.
Before the decision, the administration had said that a loss in the case could force the government to unwind trade deals with other countries and potentially refund tens of billions of dollars.
In its decision, the court did not include guidance about refunding tariff payments.
New Tariffs
Following the court’s ruling, President Donald Trump declared he can “actually charge more tariffs than I was charging in the past under the various other tariff authorities, which have also been confirmed, and fully allowed.”
The president later signed an executive order imposing “a global 10% tariff on all countries, which will be effective almost immediately.” That order takes effect Feb. 24.
Trump invoked Section 122 of the U.S. Trade Act of 1974, which allows the temporary imposition of tariffs—up to 15%—to address a “large and serious balance-of-payments deficit.”
No president has ever used the 1974 law to impose tariffs. Section 122 tariffs expire after 150 days unless Congress passes legislation to extend the levies.
A day after signing the executive order, the president posted on social media that he now intended to raise the new Section 122 tariffs to the maximum 15% rate.
Certain products within the energy, pharmaceuticals, automobile, and aerospace sectors are exempt, as are goods that comply with the U.S.-Mexico-Canada Agreement.
The Yale Budget Lab estimates the new 10% levies will raise the effective tariff rate back to 15.4%, eliminating a significant part of the reduction created by the Supreme Court’s ruling.
The executive order also continued the suspension of the de minimis exemption for imported packages valued at less than $800, an issue that has proved costly for many small businesses.
The Supreme Court’s ruling appeared to invalidate the administration’s decision last July to eliminate the exemption, which was in effect for over eight decades.
Jobs, Economic Impact
The court’s decision dropped the same day the U.S. Bureau of Economic Analysis’ release of the fourth quarter GDP report, which showed economic growth slowed sharply at the end of last year.
The national economy grew just 1.4% in the fourth quarter, a sharp slowdown from the 4.4% growth posted in the previous quarter.
For 2025, the economy expanded 2.2%, down from 2.4% the previous year, and the weakest growth rate since 2022.
The Trump administration has long claimed tariffs were needed to revitalize American manufacturing by protecting U.S. producers, but that has not materialized—particularly in Connecticut.
The U.S. economy expanded 2.2% in 2025, the weakest growth rate since 2022.
Nationally, manufacturing employment declined by 70,000 jobs or roughly 0.5% in 2025.
Connecticut accounted for 2,600 of those lost jobs, a 1.7% decline—the worst one-year drop in the sector’s employment levels since the Great Recession.
Imports to the state expanded in 2025, growing $1.2 billion from 2024, roughly 5.1%.
The increases were especially acute for commodities that represent intermediate goods for manufacturing, such as primary metals, which grew nearly 50% year-over-year in terms of value imported.
These increases likely reflect a combination of firms front-loading imports ahead of announced tariffs and higher prices for key inputs.
Challenge for Producers, Consumers Alike
The impact on manufacturing is the most commonly examined piece of the tariff puzzle, but consumers are also feeling the impact in the form of higher prices.
A Federal Reserve Bank of New York report released earlier this month found that roughly 90% of tariff costs were passed through to U.S. importers—and in many cases ultimately to consumers. This largely mirrors previous research.
Inflation has come down over the past year, but has remained above the Federal Reserve’s target of 2%.
Tariffs do not create persistent inflation on their own, but they do raise price levels—making the path back to 2% more difficult.
Tariffs represent a roadblock, but there are still levers state policymakers can pull to make Connecticut more affordable.
With inflation still above the Fed’s threshold, interest rates have remained elevated relative to the pre-pandemic period, resulting in a higher cost of borrowing for businesses and consumers.
Looking ahead, affordability needs to remain key for lawmakers in Washington as well as Hartford.
Tariffs represent a roadblock to that effort, but there are still levers policymakers can pull to make Connecticut more affordable and competitive.
Trade policy may be determined in Washington, but Connecticut’s competitiveness is not.
Energy, housing, childcare, healthcare—these are areas where state policies directly shape affordability and long-term growth.
About the author: Dustin Nord is the director of the CBIA Foundation for Economic Growth & Opportunity.
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