US markets tumble as Trump raises tariffs to 15%
Trade policy shift under Section 122 follows Supreme Court ruling, fuels recession fears
US stocks fell sharply on Wednesday after President Donald Trump announced an immediate increase in global tariffs to 15%, up from a previous 10% rate, as investors weighed the economic implications of escalating trade tensions. The move comes one day after a Supreme Court ruling struck down the administration's previous tariff approach.
Trump confirmed the tariff increase in a post on Truth Social, stating the measure takes effect immediately under Section 122 of the Trade Act of 1974. The legal framework allows temporary tariffs of up to 15% for 150 days unless extended by Congress, providing the administration with a pathway to maintain trade restrictions following the court's rejection of tariffs imposed under the International Emergency Economic Powers Act.
The Supreme Court's 6-3 decision on Tuesday clarified that only Congress holds the authority to impose tariffs, forcing the administration to pivot to Section 122 authority. In his post, Trump described the ruling as "anti-American" and framed the tariff increase as a response to foreign exploitation of US economic strength.
The announcement reignited concerns about inflationary pressures and economic growth that have rattled markets throughout Trump's second term. The effective US tariff rate surged from 2.3% at the end of 2024 to 15.8% by August 2025, and economists warn the new 15% baseline could push average rates toward 18-20%.
"Tariffs are essentially a tax on imports that typically translates to higher prices for American consumers," J.P. Morgan Global Research analysts noted in a recent report. The firm pointed to historical data from 2018-2019 showing that US tariffs on Chinese goods resulted in a near one-to-one increase in import prices, with costs largely passed on to consumers.
Economists estimate that approximately 90% of tariff costs are borne by US companies and consumers rather than foreign exporters. The economic burden comes as American households already struggle with elevated inflation and cost-of-living pressures. A Pew Research survey indicated that 53% of US adults believe Trump's policies have harmed the economy, with 74% citing inflation and tariffs as negative factors.
The International Monetary Fund has estimated that a universal 10% increase in US tariffs, combined with retaliation from major trading partners, could reduce US GDP by 1% and global GDP by approximately 0.5% through 2026. With Trump's new 15% baseline and the potential for sectoral tariffs, economists warn the economic impact could be more severe.
Business confidence has already deteriorated amid the trade policy uncertainty. J.P. Morgan economists noted that tariff announcements have "led to increased market volatility and material headwinds that are expected to weigh on growth," with sentiment measures declining and equity markets experiencing periodic sell-offs.
Public opinion remains largely opposed to the tariff escalation. A YouGov poll found that 60% of Americans supported the Supreme Court's decision to strike down the previous IEEPA-based tariffs, with many respondents linking tariffs to higher consumer prices.
Despite Trump's assertions that tariffs improve the trade deficit, official figures show the deficit increased by 95% by November 2025 following the April 2025 tariff rollout. The 150-day duration of the Section 122 tariffs provides a limited window for the administration to secure congressional extension or pursue alternative trade measures, leaving markets bracing for continued policy uncertainty.