The Roundup – February 2026

Import Levies Invalidated

In mid-February markets heard the decision from the US Supreme Court, which ruled that the President had overstepped his authority in prescribing two broad categories of tariffs. This marked a change in which the verdict from the country’s top court went against the President, who has otherwise received a broad amount of leeway to enact his policies.

Regardless, the landscape around import duties is likely to be similar a year from now with the President vocal about his intention to reinforce the tariffs through other legal means. On cue, following the defeat, the Administration moved to utilise a piece of legislation to impose temporary tariff rates, almost immediately.

The wider impact of the roll back of the tariffs enacted under the International Emergency Economic Powers Act (IEEPA) is twofold, initially increasing uncertainty, but offering the potential for a lower effective (average) tariff rate overall, compared to if the import levies had been upheld.

The exact mechanism and final level of duties that will be enforced is currently unclear, feeding market unease. For example, while the initial temporary tariff rate was signed in as 10%, the Administration caused confusion verbalising its intentions to increase the rate to 15%. While the lower rate has subsequently held, there has been no clarification as to why.

Secondly, the unwinding of the tariffs enforced using emergency powers, could result in a lower average rate, as the original mechanism provided a high degree of flexibility and limited restrictions, whereas the other legislative options are much more prescriptive and may not be able to replicate the full extent of the duties that were invalidated.

While the current scenario provides a natural opportunity for renegotiation of the recent trade agreements penned between the US and a number of its trading partners. Several partners including Britain, the European Union and Taiwan have stated they will honour their agreements, opting for consistency over the potential for a more favourable outcome.

Sharemarkets reaction to the Court’s verdict was generally muted, reflecting the decision was viewed as a likely outcome, and supporting the notion that the result will ultimately do little to change the Administrations trade objectives. However, uncertainty around US trade policy remains high, and continues to pose potential economic knock-on effects.

More broadly the US dollar softened against a basket of other currencies off the back of the result, while bond markets experienced downward pressure following investor concerns around government finances, and the unanswered question about whether the estimated $175 billion collected in tariff revenues will be refunded.

Recovery Fueled by Different Drivers

For New Zealand the decision by the Supreme Court reduces the likelihood of a sudden spike in tariff rates, given the other authorities to impose duties focus on national security and trade imbalances (both of which would be hard to justify). Good news for our export market.

While the RBNZ held interest rates at their February meeting, data indicates the full impact of the previous rate cuts are still working their way through the economy. Consumer confidence has started to lift, which should help to offset weakness elsewhere.

This shift in dynamics is seeing a different suite of drivers in the early stages of NZ’s economic recovery, with the lower interest rate environment supporting spending. Peaking unemployment and inflation, which are both forecast to fall during the year, will also contribute to growth activity.