The US Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The ruling is expected to cut the US average effective tariff rate by about half. Tariff revenue collected in 2025 totalled nearly $290bln. The administration has used customs duties as a fiscal backstop, partly tied to the costs of the One Big Beautiful Bill Act.

Shift Toward Alternative Tariff Authorities

With IEEPA tariffs now limited, attention is shifting to other legal tools. Section 232 is often described as allowing uncapped tariffs, with no stated limit on either the rate or the duration. Current sector tariffs already cover areas like metal products, autos, and lumber. More sector-based tariffs could follow as the White House launches new trade reviews, similar to the process used ahead of “Liberation Day”. Friday’s Supreme Court decision adds major uncertainty. Expect a jump in market volatility as the administration rewrites its trade strategy. In the coming weeks, options are likely to be the main focus as markets reprice risk across sectors. Watch for higher VIX premiums, similar to last year’s trade disputes, when volatility indices jumped by more than 15 points in just a few days after comparable announcements. This shift will create clear short-term winners and losers. Companies hit hardest by the now-voided IEEPA levies may see a relief rally. Sectors targeted for new Section 232 investigations could face immediate pressure. We are watching high-import sectors such as electronics and industrial machinery. U.S. Census Bureau data from late 2025 showed these categories made up more than $900 billion in annual imports.

Positioning For Sector Specific Tariff Risk

We should prepare for targeted tariffs on new product groups beyond the existing measures on metals and autos. Since the Commerce Department opened a Section 232 investigation into foreign-made semiconductors and EV battery components last month, puts on technology and automotive ETFs may be a sensible hedge. The administration also needs to replace the nearly $290 billion in tariff revenue collected in 2025, which makes high-value import sectors more likely targets for new levies. Expect this uncertainty to spill into foreign exchange markets, too. The US dollar will likely become more volatile against the currencies of major trading partners, especially the euro and Mexican peso. Their trade surpluses with the US rose by 4% and 6%, respectively, in the final quarter of 2025. Options on currency ETFs can help manage risk from sudden, policy-driven moves. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now