US Supreme Court Ruling Brings Limited Relief to Global Economy

By Mark John and Philip Blenkinsop

LONDON, Feb 20 (Reuters) - While the U.S. Supreme Court's ruling on Friday against President Donald Trump's use of tariffs marks a clear setback for his use of trade levies as an economic weapon, analysts say it offers little immediate relief for the global economy.

Trade Impact and Policy Outlook

Instead, they expect another bout of activity-crimping confusion combined with near-certainty that Trump will seek other means to replace the raft of global tariffs now struck down as unlawful.

Refund Uncertainty for Collected Levies

In the meantime, a long list of uncertainties remains -including what new tariffs Trump will seek to impose, whether the funds from the annulled levies will have to be refunded, and whether territories that entered deals with the U.S. to mitigate their impact will see those pacts reopened for review.

Trump’s 10% Tariff Response

Responding to the ruling, Trump announced new global tariffs of 10% for an initial 150-day period and acknowledged it was not clear if or when there would be any refunds.

"In general, I think it will just bring in a new period of high uncertainty in world trade, as everybody tries to figure out what the U.S. tariff policy will be going forward," said Varg Folkman, analyst at the European Policy Centre think tank.

"In the end it's going to look pretty much the same."

Economists at ING bank agreed: "The scaffolding has come down, but the building remains under construction. No matter how today's ruling reads, tariffs are here to stay."

IEEPA Tariffs Struck Down

Friday's ruling concerns only the tariffs launched by Trump on the basis of the International Emergency Economic Powers Act, or IEEPA, intended for national emergencies. So far, they are estimated to have brought in over $175 billion in funds.

Trade-weighted Tariff Cut to 8.3%

By itself, the ruling chops the trade-weighted average U.S. tariff almost in half from 15.4% to 8.3%, trade policy monitor Global Trade Alert estimated.

China, Brazil, India Reductions

For those countries on higher U.S. tariff levels, the change is more dramatic. For China, Brazil and India, it will mean double-digit percentage point cuts, albeit to still-high levels.

BILATERAL DEALS WITH US COULD NOW 'UNRAVEL'

Bilateral Deals at Risk

Yet no one expects this to remain the status quo: the Trump administration has served notice long before the ruling that it can and will use other legal vehicles to reimpose tariffs.

At the same time, the couple of dozen countries which entered bilateral deals with the U.S. to set tariffs and in some cases invest in the United States - will now assess whether the Supreme Court ruling gives them leverage to renegotiate.

The lawmakers who must ratify the European Union's pact with the United States will do that as soon as Monday, said Bernd Lange, chair of the trade committee of the European Parliament.

EU Ratification Timeline

"The era of unlimited, arbitrary tariffs ... might now be coming to an end," Lange said on X. "We must now carefully evaluate the ruling and its consequences."

Britain meanwhile expects its privileged trading position with the United States to continue, the government said on Friday of the baseline 10% tariff it agreed with Washington.

Economic Backdrop and Forecasts

Indeed, many countries were learning to live with Trump's tariffs, the bulk of which were being shouldered by Americans, according to a Federal Reserve Bank of New York report released this month.

IMF 2026 Growth Forecast

In the most recent update of its regular World Economic Outlook, the International Monetary Fund forecast global growth at a "resilient" 3.3% in 2026.

China even reported a record trade surplus of nearly $1.2 trillion in 2025, led by booming exports to non-U.S. markets as its producers adapted to the Trump onslaught.

EU Pact and Political Risks

Thus, some countries may choose to stick with their existing bilateral deals with the U.S. rather than "inviting the kind of uncertainty we saw in the spring in 2025," EPC's Folkman said of the chaos caused by Trump's so-called "reciprocal" tariffs.

Conversely, Niclas Poitiers, research fellow at the economic think tank Bruegel, noted there were a lot of political question marks over the EU-U.S. trade deal, in which Europe was seen to have backed down and got the short end of the stick.

"There could be circumstances in which the deal unravels," he noted.

(Writing by Mark John; additional reporting by Francesco Canepa in Frankfurt, William Schomberg in London; editing by Diane Craft)