Our Thoughts on the Latest Tarrif Rulings
FEBRUARY 2026
On 20th February the Supreme Court of the United States handed down its ruling on President Trump’s tariff regime, stating the tariffs were unlawful. The President had based his economic policy on the revenues generated by these duties. His response was to enact sweeping global tariffs through the Trade Act of 1974. This broad-based approach contrasts with the selective and sometimes capricious stance that has now been deemed unlawful. Initially the President stated the tariffs would be 10%, then 15%, which has now been moved back to 10%. The new tariffs came into force on Tuesday 24th February and are time limited to last 150 days.
The Supreme Court ruling was a blow for the President’s plan to fund deficits and tax cuts. I assume that his team are working on Plan B, but the ruling will curtail the trade tariff freedoms he has enjoyed during the early stages of his second Presidency.
What does this mean for the economic environment? Global economic conditions are back in flux, which does not help corporates plan. At government level, many countries are asking the US for guidance on their individual deals, which creates further levels of uncertainty. Promises of investment into the US for better trade deals, while tenuous before, now seem even less likely. On the plus side, it appears the President will abide by the Supreme Court ruling. Additionally, the ruling removes the President’s weapon of choice to coerce nations to his will. This must be viewed in the context of the recent rhetoric towards Denmark and the President’s ambitions to annexe Greenland. His fangs are not what they used to be, but they can still draw blood.
So far, the market reaction has been muted, gold has risen the US$ has weakened slightly, equity markets appear non-plussed. Bond markets have also been subdued. The US does have the thorny issue of US Government debt needing to be refinanced. This will be a problem that Federal Reserve Chair nominee, Kevin Warsh, will have to deal with. Where rates go from here is harder to predict. The President demands lower rates, but the economy may not be able to withstand them.
From a client’s perspective the most pertinent question from the ruling should be what changes have been made to our investment strategy on the back of this. Bluntly, nothing. Our exposure to the US has been underweight for some time and we maintain our diversified approach to US equities, through active and passive strategies. The former allows us to rifle shot themes whereas the latter gives exposure to general market sentiment. Our policy is to continue to focus on the areas where we have confidence in predicting outcomes.
We continue to actively assess the situation and will make any course corrections as we deem appropriate.
