What has changed and what business leaders should do next

By Dr. Mary C. Kelly  |  September 27, 2026

Trade policy in 2026 has moved faster than most companies can revise a price list. A Supreme Court decision overturned the legal foundation for sweeping U.S. emergency tariffs in February. A temporary replacement then expired in July. Yet import duties did not disappear. The United States increasingly relied on other laws to target particular trade practices, countries, and strategic industries. For business leaders, the result is a complicated mix of tariffs, exemptions, negotiations, and retaliation that can affect a product at several points in its supply chain.

The central management question is no longer simply, “What is the tariff on imports from this country?” It is, “What is the total landed cost of this specific product, under the rules in force when it enters the country, and what happens if those rules change?” That distinction matters to purchasing, pricing, capital investment, and customer commitments.

The February ruling changed the legal landscape

In 2025, the Trump administration used the International Emergency Economic Powers Act, or IEEPA, for broad “reciprocal” tariffs and additional duties linked to drug trafficking. On February 20, 2026, the Supreme Court ruled that IEEPA did not authorize the president to impose tariffs. The decision concerned that particular legal authority. It did not eliminate the government’s ability to impose duties under other trade statutes. It also left a consequential practical question: how importers would recover duties collected under measures the Court had rejected. [1]

The administration responded with a 10 percent temporary import surcharge under Section 122 of the Trade Act of 1974, effective February 24. That provision allowed a surcharge for up to 150 days without an act of Congress extending it. The surcharge expired July 24. It was never a universal tax on every import: the proclamation excluded, among other things, qualifying goods from Canada and Mexico under the USMCA, certain energy and agricultural products, pharmaceuticals, some electronics, and goods or portions of goods subject to specified national-security measures. [2]

After July, the administration leaned more heavily on Section 301, which addresses certain unfair foreign practices, Section 232, which addresses imports found to threaten national security, and Section 338, which permits responses to discriminatory treatment of U.S. commerce. Each authority has different procedures and scopes. An announcement under one of them cannot safely be translated into a single tariff rate for an entire country. [3]

Trade negotiations did not stop

The first months of 2026 brought a series of bilateral arrangements or frameworks involving India, Indonesia, Bangladesh, Taiwan, Argentina, and other partners. In February, for example, the White House said its India framework would reduce a stated reciprocal tariff from 25 percent to 18 percent and remove an additional 25 percent duty connected to India’s purchases of Russian oil. The Supreme Court ruling soon changed the legal status of IEEPA-based duties, underscoring why an announced framework, a legal tariff authority, and the duty actually collected at the border must be checked separately. [3, 4]

The U.S.–China relationship also became more selective. At a May meeting in Beijing, the White House announced boards for trade and investment discussions, alongside Chinese commitments involving U.S. agricultural products, aircraft, and access to critical minerals. During President Xi’s September visit to the United States, the White House said the two sides had agreed on recommendations for more favorable tariff treatment for $30 billion of nonsensitive goods in each direction. Those recommendations cover categories such as American agricultural goods and medical devices and Chinese consumer products. They should be described as proposed favorable treatment, rather than an already implemented blanket reduction. Critical-mineral shipments and the fulfillment of purchase commitments remain measures of whether the relationship is genuinely stabilizing. [5, 6]

North America entered a difficult review

The United States, Mexico, and Canada held the required six-year review of the USMCA on July 1. The United States declined to renew the agreement in its current form. Crucially, USTR said the agreement remains in force while the parties continue discussions. Businesses should not confuse “not renewed” with “terminated.” Origin rules and preferential treatment still matter, even as the future terms are negotiated. [7]

Canada became a particularly visible source of friction. In July, USTR announced additional 50 percent Section 338 duties on specified Canadian imports, affecting nearly $20 billion of trade, in response to what it characterized as discriminatory treatment of U.S. vehicles, alcohol, and dairy. In September, the administration modified those actions and announced targeted import bans as Canada’s retaliation continued. These measures do not mean every Canadian product faces a 50 percent duty. They do mean that cross-border supply chains and U.S. exporters can be exposed to a dispute through very different channels. [8]

New tariffs targeted practices and industries

Section 301 became an important instrument after the court ruling. In March, USTR opened investigations into structural manufacturing overcapacity in 16 economies and separate investigations into the failure of 60 economies to prohibit imports made with forced labor. In July, USTR imposed duties arising from the forced-labor investigations, generally at 10 or 12.5 percent, with country-specific treatment and product exceptions. The overcapacity investigations should be discussed as investigations unless and until a specific final action is announced. [9]

Brazil was the subject of a distinct Section 301 action. In July, USTR imposed a 25 percent duty on certain Brazilian goods after examining issues that included digital trade, preferential tariffs, intellectual property, ethanol market access, and illegal deforestation. The scope is certain goods, not every import from Brazil. [10]

National-security measures under Section 232 added another layer. During 2026, the administration adjusted duties on steel, aluminum, and copper products and took actions concerning patented pharmaceuticals, drones, and polysilicon. The details differ sharply. Certain sensitive drones face a stated 100 percent duty, while other covered drones and components have lower rates or treatment tied to specified trading partners; some component duties have later start dates. The polysilicon action, announced in August, includes a minimum import price program and a 15 percent duty on specified downstream derivatives, with implementation scheduled for later in the year. [11]

The pharmaceutical proclamation is especially easy to oversimplify. It states a 100 percent rate for covered patented products but provides other rates for specified partners and companies with approved plans to move production to the United States. Certain company agreements and specialty products can receive zero-rate treatment, and generics are not subject to this Section 232 tariff at present. Some provisions began for listed companies in July; for other companies, the stated effective date is September 29. A headline about “100 percent drug tariffs” therefore does not describe what every medicine will face. [12]

What the economic numbers do and do not say

A tariff is paid to U.S. Customs by the importer. That does not settle who ultimately bears its cost. Suppliers may change prices, importers may accept lower margins, and customers may pay more. The split varies by product, competition, contracts, exchange rates, and how quickly a company can change suppliers. The cost of a tariff can also affect a U.S. manufacturer that buys imported inputs, even when the finished product is made domestically.

In its August 24 assessment, Yale’s Budget Lab estimated an average statutory U.S. tariff rate of about 11.0 percent after the Section 122 measure expired and Section 301 duties replaced part of it. It estimated an eventual overall consumer price impact of about 0.7 percent and an annual household cost of roughly $1,100 under then-current law. These are modeled impacts, not a claim that every retail price rose 11 percent or that every family has already paid that amount this year. [13]

Global trade has proved more resilient than the rhetoric sometimes suggests. The World Trade Organization reported that its September goods-trade barometer stood at 102.0, above the benchmark of 100, supported partly by demand for electronics associated with artificial intelligence. Its March forecast projected 1.9 percent growth in world merchandise trade volume for 2026 under its baseline scenario, or 1.4 percent if higher energy prices persisted. Trade can keep growing even as individual firms face significant disruption and uncertainty. [14]

Five decisions business leaders should make now

First, calculate exposure at the product level. Ask for the tariff classification, legally determined country of origin, applicable trade agreement treatment, entry date, and every potentially applicable additional duty. A supplier’s mailing address or an invoice’s country label is not a substitute for an origin analysis.

Second, stress-test pricing and contracts. Identify which agreements allow a price adjustment after a duty changes and which leave one party absorbing the cost. A quote that is profitable when issued can become unprofitable before goods clear customs.

Third, evaluate alternate sourcing on total landed cost. A lower quoted factory price may be overwhelmed by duties, freight, quality risk, inventory needs, or a longer lead time. Likewise, moving final assembly does not automatically change a product’s legal origin.

Fourth, watch export markets as closely as imports. Retaliation, market-access restrictions, and shifts in foreign purchasing can reduce sales for American producers even when their own imported inputs are unaffected.

Fifth, separate temporary measures, final actions, scheduled start dates, and negotiating statements in board and investment discussions. A factory decision lasts much longer than a news cycle. Leaders should know which policy assumptions are firm enough to support a capital commitment and which deserve a contingency plan.

The outlook for the rest of 2026

The next developments to watch are the implementation of scheduled product-specific measures, the U.S.–Canada dispute and USMCA talks, the results of Section 301 investigations, and whether the United States and China turn their September recommendations into operative tariff changes. No single headline rate will adequately describe the outcome. The companies best positioned to respond will be the ones that know precisely where their goods come from, what each shipment costs after customs, and how quickly they can adjust when a rule changes.

Sources

[1] U.S. Supreme Court, Learning Resources v. Trump, February 20, 2026. https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf

[2] White House, Temporary Import Surcharge proclamation, February 20, 2026. https://www.whitehouse.gov/presidential-actions/2026/02/imposing-a-temporary-import-surcharge-to-address-fundamental-international-payments-problems/

[3] USTR, Presidential Tariff Actions. https://ustr.gov/trade-topics/presidential-tariff-actions

[4] White House, U.S.–India trade deal fact sheet, February 9, 2026. https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-the-united-states-and-india-announce-historic-trade-deal/

[5] White House, China deals fact sheet, May 17, 2026. https://www.whitehouse.gov/fact-sheets/2026/05/fact-sheet-president-donald-j-trump-secures-historic-deals-with-china-delivering-for-american-workers-farmers-and-industry/

[6] White House, China state visit fact sheet, September 25, 2026. https://www.whitehouse.gov/fact-sheets/2026/09/fact-sheet-president-donald-j-trump-advances-a-fair-and-reciprocal-relationship-with-china-while-hosting-historic-state-visit/

[7] USTR, Statement on the USMCA Joint Review, July 1, 2026. https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/ambassador-greer-issues-statement-usmca-joint-review

[8] USTR, Canada Section 338 statements, July 20, and September 8, 2026. https://ustr.gov/about/policy-offices/press-office/press-releases/2026/september/ambassador-greer-issues-statement-president-trumps-response-canadas-continued-retaliation-against

[9] USTR, Forced Labor Section 301 Action, July 23, 2026. https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/ustr-takes-action-forced-labor-section-301-investigations

[10] USTR, Brazil Section 301 Action, July 15, 2026. https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/ustr-section-301-action-brazils-unreasonable-acts-policies-and-practices

[11] White House, Drones and Polysilicon fact sheets, August 2026. https://www.whitehouse.gov/fact-sheets/2026/08/fact-sheet-president-donald-j-trump-bolsters-national-security-and-strengthens-u-s-supply-chains-by-imposing-tariffs-on-drones-and-their-parts-and-components/

[12] White House, Pharmaceuticals proclamation, April 2, 2026. https://www.whitehouse.gov/presidential-actions/2026/04/adjusting-imports-of-pharmaceuticals-and-pharmaceutical-ingredients-into-the-united-states/

[13] Yale Budget Lab, The State of U.S. Tariffs, August 24, 2026. https://budgetlab.yale.edu/research/state-us-tariffs

[14] WTO, Goods Trade Barometer, September 9, 2026. https://www.wto.org/english/news_e/news26_e/wtoi_09sep26_481_e.htm

Dr. Mary C. Kelly is a Hall of Fame leadership speaker, PhD economist, retired Navy Commander, and author of 22 books, including Leadership is Tough: What Great Leaders Do Differently.