Futures fall after President Trump announces new global tariff rate boosted to 15%
10% global tariffs will be 15% global tariffs.
In a Truth Social post on Saturday, President Donald Trump said he was boosting new levies slated to go into effect after the Supreme Court ruled against his reciprocal tariff regime.
US equity futures were lower on Sunday evening as traders digested the news, with S&P 500 futures and Nasdaq 100 futures off 0.5% and 0.7%, respectively, as of 7:26 p.m. ET.
Section 122 of the Trade Act of 1974 sets a ceiling of 15% on the tariff rate that can be imposed “to deal with large and serious United States balance-of-payments-deficits,” which was cited as part of the rationale for this measure.
This tax on imports can stay in place for 150 days; afterwards congressional approval would be required. It will not apply to a variety of different products, including energy, critical minerals, certain electronics, passenger vehicles, and goods that fall under the USMCA.
In press interviews on the weekend, Treasury Secretary Scott Bessent described this global tariff as a “five-month bridge” during which time the administration to go through the process of enacting tariffs using alternative authorities.
JPMorgan estimates that the effective US tariff rate will fall modestly as a result of the end of IEEPA tariffs and utilization of Section 122.
“The macro impact of these developments shouldn’t be huge,” writes JPMorgan chief US economist Michael Feroli. “This isn’t to say there won’t be headaches for importers juggling different tariff schedules, but the difference in the aggregate fiscal burden of the tariffs on domestic purchasers is not enough to have a big effect on our outlook.”
That being said, US effective tariff rate has risen meaningfully during each of President Trump’s terms in office. Trump Always Raises Tariffs (TART).
“President Trump really believes that tariffs work and that trade deficits are bad,” writes Libby Cantrill, head of public policy at PIMCO. “Given the tools he has, we should expect tariff and trade policy uncertainty to last as long as Trump is in the White House.”
However, the smaller set of tools the president is being forced to work with have “substantially greater process constraints in place, meaning that the planning uncertainty for firms is reduced even if the administration is committed to reinstating some of the tariffs,” writes Peter Williams, economist at 22V Research. “The whimsical nature of the process over the past year is gone and with it much of the day-to-day uncertainty.”
Section 122 of the Trade Act of 1974 sets a ceiling of 15% on the tariff rate that can be imposed “to deal with large and serious United States balance-of-payments-deficits,” which was cited as part of the rationale for this measure.
This tax on imports can stay in place for 150 days; afterwards congressional approval would be required. It will not apply to a variety of different products, including energy, critical minerals, certain electronics, passenger vehicles, and goods that fall under the USMCA.
In press interviews on the weekend, Treasury Secretary Scott Bessent described this global tariff as a “five-month bridge” during which time the administration to go through the process of enacting tariffs using alternative authorities.
JPMorgan estimates that the effective US tariff rate will fall modestly as a result of the end of IEEPA tariffs and utilization of Section 122.
“The macro impact of these developments shouldn’t be huge,” writes JPMorgan chief US economist Michael Feroli. “This isn’t to say there won’t be headaches for importers juggling different tariff schedules, but the difference in the aggregate fiscal burden of the tariffs on domestic purchasers is not enough to have a big effect on our outlook.”
That being said, US effective tariff rate has risen meaningfully during each of President Trump’s terms in office. Trump Always Raises Tariffs (TART).
“President Trump really believes that tariffs work and that trade deficits are bad,” writes Libby Cantrill, head of public policy at PIMCO. “Given the tools he has, we should expect tariff and trade policy uncertainty to last as long as Trump is in the White House.”
However, the smaller set of tools the president is being forced to work with have “substantially greater process constraints in place, meaning that the planning uncertainty for firms is reduced even if the administration is committed to reinstating some of the tariffs,” writes Peter Williams, economist at 22V Research. “The whimsical nature of the process over the past year is gone and with it much of the day-to-day uncertainty.”
