An EU strategy in the wake of the United States Supreme Court tariffs ruling

The 20 February United States Supreme Court ruling that President Donald Trump lacked the authority to impose tariffs under the US International Emergency Economic Powers Act (IEEPA) was a strong affirmation of the rule of law and the separation of powers. However, Trump’s virulent reaction and imposition of a 15% import surcharge* to replace the IEEPA levies has injected new unpredictability into US trade policy.

To maintain some tariffs for now, Trump has fallen back on section 122 of the US Trade Act, which authorises temporary levies in case of significant balance-of-payments problems. Further turbulence could follow with the start of US investigations into potentially unfair trade practices (section 301 of the Trade Act) and possible tariffs via other legal avenues, including additional national security restrictions (section 232 of the Trade Expansion Act).

US Trade Representative, Jamieson Grier, had said the US plans to respect different agreements concluded with countries in relation to the disallowed IEEPA tariffs, including the so-called Turnberry agreement of August 2025 with the European Union. Nevertheless, the EU must evaluate potential new US tariffs and how they relate to the Turnberry agreement.

The 15% tariff surcharge under section 122 applies for 150 days from 24 February. The surcharge is not likely to apply to products already covered by section 232 (such as cars and steel) or that are exempted from tariffs under different framework agreements. For EU companies, the surcharge means higher duties than the 15% maximum in the Turnberry agreement, except when the US most-favoured nation duty is zero.

The surcharge therefore clearly breaches Turnberry. It is very unlikely Congress will extend the surcharge, so the Trump administration will need to use other legal authorities to replace the tariffs introduced under IEEPA.

Investigations under section 301 can lead to tariffs or other trade restrictions to deal with “unjustifiable, unreasonable, discriminatory, and burdensome acts policies or practices” by trading partners. Grier has said section 301 investigations will cover most major trading partners and will address areas including “pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services [and] digital services taxes”.

The EU will need to analyse the scope of such section 301 investigations and their relationship with the Turnberry agreement. Investigations are likely to cover EU or member-state legislation on which no commitments were made in the Turnberry agreement and that touch on critical areas of EU sovereignty, such as digital regulation. The US applying or threatening tariffs in response to such practices would both breach Turnberry and amount to coercion, which may trigger the use of by the EU of the Anti-Coercion Instrument (ACI, Regulation 2023/2675), giving the European Commission more power to push back against US threats. 

In the case of section 232, there is a risk that new tariffs will be introduced on sectors of importance for the EU, such as machinery and medical devices.

The EU response should be firm while avoiding escalation. The first reaction should be to suspend – as the European Parliament is set to do – ratification of Turnberry unless the US commits to ensure that the section 122 tariffs respect the agreed maximum tariff of 15%. In case the US decides to introduce new section 232 tariffs or increase the tariff rate applicable to cars, the EU should be ready to hit back proportionately by reactivating retaliatory levies on €93 billion of imports from the US that were suspended by the Turnberry agreement.

The EU should also make clear it does not intend to negotiate on its digital rulebook, and should start discussing with EU governments a strategy to deploy the ACI in case the threat materialises. Under the ACI, the Commission could take retaliatory steps covering “trade in goods, services, foreign direct investment, financial markets, public procurement, trade-related aspects of intellectual property rights, export controls, and more”.

The Commission should discuss this strategy with like-minded partners to identify common red lines in discussions with the US. In relation to section 122, the EU should also raise at the World Trade Organization the need for the US to invoke the balance-of-payments exception allowed under the General Agreement on Tariffs and Trade. This would require a determination by the International Monetary Fund that the reserve situation in the US can justify such exceptional measures.

* After the publication of this article, the US clarified that the surcharge would initially be 10%.