[ING, MUFG, SG Report] US Supreme Court Halts Trump's Tariffs: Passing the 'Tariff Peak' and a Shifting Currency Market

Subtitle: The Butterfly Effect of the 15% Blanket Tariff (Plan B): Smiling Emerging Markets and the Direction of the Dollar

Original Report Date: February 23, 2026

📌 3-Line Summary

• Passing the Tariff Peak: The US Supreme Court ruled against the Trump administration's broad use of IEEPA for tariffs, effectively dropping the US effective tariff rate from 16% to 13.7%.
• Diverging National Fortunes: The implementation of a 15% blanket tariff (Plan B) under Section 122 of the Trade Act unexpectedly benefited previously high-tariff targets like China and Brazil, while penalizing favored trade partners like the UK and Australia.
• Dollar Weakness and Asian Currency Opportunities: The reduction in tariffs eases inflation fears, strengthening expectations for three Fed rate cuts this year. This environment puts downward pressure on the dollar and acts as a bullish catalyst for emerging market currencies, including the Korean Won.

📖 In-Depth Report Analysis

A massive turning point has occurred in the US trade policy that recently shook global financial markets. Global investment banks ING, MUFG, and SG unanimously agree that following the US Supreme Court's unconstitutional ruling on February 20, "the peak of US tariffs has already passed," and they analyzed the structural changes this will bring to global asset markets.

■ 1. Dramatic Drop in Effective Tariff Rate: From 16% to 13.7%

• Supreme Court Ruling & Plan B: When the Supreme Court halted the use of the International Emergency Economic Powers Act (IEEPA), the Trump administration immediately invoked Section 122 of the Trade Act to impose a surprise 15% tariff on all countries.
• The Tariff Paradox: While 15% seems high, the US average effective tariff rate—which had hit a post-1936 high of 16% under the previous regime—actually dropped to 13.7% due to this measure (excluding items under Section 232 and USMCA compliance).
• Limited Executive Power: SG notes that the newly invoked Section 122 is only valid for a maximum of 150 days and requires Congressional approval for extension. Thus, while tariff policies will continue, the unchecked "tariff bombs" of the past are unlikely. (There is also slight Treasury weakness due to concerns over a potential $170 billion tariff refund).

■ 2. The Paradox of Section 122: China & Brazil Cheer, UK & Australia Fret
The blanket 15% tariff sharply divided countries based on their existing trade agreements.

• Winners (China, Brazil): Countries previously targeted with ultra-high tariffs (e.g., 60%) saw an unexpected windfall, with effective tariffs dropping by roughly 7-16%, creating a favorable environment across emerging markets (EM).
• Losers (UK, Australia, Singapore): Countries that previously enjoyed preferential 10% tariffs saw their effective rates noticeably increase under the blanket 15% application. Consequently, the tariff gap between China and other Asian nations has narrowed, reducing the incentive for global supply chains to route exports through proxy countries.

■ 3. Easing Inflation Pressures and the Direction of the Dollar
The overall decline in effective tariff rates is a key factor in lowering US import prices and easing inflation pressures.

• Rate Cut Expectations: MUFG analyzes that the growing momentum for disinflation strengthens the forecast that the Fed will cut interest rates three times in 2026.
• 3 Drivers of Dollar Weakness: ① Lower inflation and a dovish Fed stance (preventative rate cuts), ② Fiscal concerns stemming from massive tariff refunds, and ③ Recovering risk appetite as military strikes on Iran were put on hold, are all pulling the dollar down.
• Dollar Support: However, SG drew a line, stating the dollar will not fall endlessly. US economic growth still outpaces the Eurozone, and short-dollar positioning is already heavily crowded, leaving fundamental room for the dollar to remain resilient.

■ 4. Asian Currency Opportunities: Won Strength and the Appeal of JGBs

• Preference for EM Currencies: Amid easing tariff risks and a weaker dollar, MUFG prefers the currencies of tech and export-driven countries like the South Korean Won (KRW) and Taiwan Dollar (TWD). (The Chinese Yuan is also expected to strengthen gradually).
• Popularity of Super-Long JGBs: When the Japanese 30-year government bond yield spiked to 3.88% in January, foreign investors scooped up a massive 2.175 trillion yen (the 3rd largest on record). Yields have since stabilized, and expectations of a Bank of Japan (BoJ) rate hike in April, alongside IMF calls for policy normalization, are defending the yen from depreciation.

💡 StockHub Insight & Comments

The extreme scenario of 'Trade War 2.0' that had been suppressing the market has effectively been neutralized by the Supreme Court ruling. A lower effective tariff rate means price stability and the resumption of the Fed's rate-cut cycle. This is a powerful tailwind for equity markets, particularly for export-driven emerging markets like South Korea and Taiwan.

In the current phase, where the strong dollar is breaking and the Won is stabilizing, it is the perfect timing to aggressively increase exposure to large-cap domestic exporters (semiconductors, autos) that were overly suppressed by tariff fears, as well as growth stocks that benefit from interest rate cuts.