US Supreme Court Strikes Down Trump’s Tariffs: Implications for Gulf Trade and Business

On February 20, 2026, a landmark ruling by the Supreme Court of the United States struck down the core legal foundation of President Trump’s emergency tariff regime. In Learning Resources, Inc. v. Trump and a consolidated companion case, the Court ruled six to three that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. In doing so, it reaffirmed that the constitutional authority to levy import duties rests exclusively with Congress.

Within hours of the decision, the White House pivoted to an alternative legal basis: Section 122 of the Trade Act of 1974. A presidential proclamation introduced a temporary global import surcharge for 150 days, effective February 24, 2026. Initially set at 10 percent, the surcharge was subsequently raised to 15 percent (the statutory maximum) amid market uncertainty and fresh legal debate over whether the United States meets the “large and serious” balance-of-payments conditions required under Section 122.

For Gulf markets, the immediate direct impact is limited due to product-level exemptions in the proclamation. Energy and energy-related products are excluded, as are goods already subject to Section 232 national security tariffs, such as steel and aluminium, to the extent that those duties apply.

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However, the region’s greater exposure lies in indirect effects. Tariff volatility increases uncertainty around global demand, particularly in key markets including China, disrupts re-export and logistics flows, and raises the likelihood that Washington will replace rapid, broad-based tariff tools with more structured but longer-lasting investigations under Sections 301 and 232.

There is also the possibility that the administration could consider invoking the rarely used Section 338 “discrimination” provision.

See also: How US Tariffs on China Are Creating New Trade Opportunities for the UAE 

Legal background and the post-IEEPA tariff toolkit

Gulf markets: Direct hits are narrow, indirect risks are wider

The Gulf’s exposure to a global surcharge is best understood through two filters: what the US actually imports from the Gulf, and whether those products are exempt under the Section 122 proclamation.

Gulf–US goods trade in 2025

On a US Census basis (goods only), US imports from Gulf partners were material but highly uneven, with the United Arab Emirates (UAE) and Saudi Arabia at the top in value terms.

Product exemptions matter disproportionately for Gulf exporters

The Section 122 proclamation does not apply to all products. It includes several important exemptions that significantly reduce the direct impact on certain exporters.

Specifically, the 15 percent surcharge does not apply to:

• Energy and energy-related products (such as crude oil, refined fuels, and certain natural gas products);

• Certain critical minerals;

• Selected agricultural products;

• Pharmaceuticals and pharmaceutical ingredients;

• Some electronic products;

• Specific vehicles and automotive parts; and

• Certain aerospace products.

Importantly for Gulf industrial exporters, goods that are already subject to Section 232 national security tariffs (including steel, aluminium, and other covered sectors) are excluded from the new Section 122 surcharge to the extent that the Section 232 tariff already applies.

In practical terms, this means the government is not “stacking” the new 15 percent surcharge on top of existing Section 232 tariffs for those specific products. If a product is already paying a Section 232 duty, it generally will not face the additional Section 122 surcharge.

Country-by-country Gulf assessment

United Arab Emirates

The UAE’s main exposure to the US market is industrial rather than hydrocarbon-based. It is a major aluminium supplier to the US, and exporters have already been operating under Section 232 national security tariffs on metals.

Because aluminium is already subject to Section 232 duties, the new Section 122 surcharge is not stacked on top of those tariffs. This means the immediate cost burden on UAE metals exporters may not materially increase under the new regime.

The broader risk for the UAE is strategic rather than purely tariff-related. Abu Dhabi has reportedly sought bilateral trade arrangements to ease US metals tariffs, reflecting a preference for negotiated carve-outs within an increasingly protectionist US trade environment. In this context, competitiveness will depend less on the temporary 15 percent surcharge and more on successful deal-making, strict compliance with rules of origin, and securing product-level exemptions.

Saudi Arabia

US–Saudi goods trade is larger than that of most other Gulf states, aside from the UAE. US import data shows that purchases from Saudi Arabia are heavily concentrated in “industrial supplies and materials,” consistent with an oil- and petrochemicals-driven trade relationship.

Since energy and energy-related products are exempt from the Section 122 surcharge, Saudi Arabia’s direct tariff exposure is limited. However, the greater vulnerability lies in oil market sensitivity.

Trade tensions have historically influenced global growth expectations and oil prices. During previous tariff escalations, oil markets reacted quickly to fears of slower economic activity. For Saudi Arabia, therefore, the key risk is not the tariff itself but the broader macroeconomic environment it creates. Fiscal planning, budget balances, and capital spending are all more sensitive to oil price movements than to the surcharge directly.

Qatar

In absolute terms, Qatar’s goods exports to the US are relatively modest. However, the country’s strategic exposure exceeds what trade figures alone suggest.

Qatar plays a central role in LNG markets, global shipping routes, and US-aligned supply chain initiatives. While energy exports are largely exempt from the Section 122 surcharge, global demand volatility and trade uncertainty can affect LNG pricing and logistics costs.

In practice, the new surcharge is unlikely to redefine Qatar–US economic ties. Instead, Qatar’s leverage will continue to rest on energy security partnerships, investment cooperation, and participation in broader supply chain strategies.

Oman

Oman’s exports to the US are smaller in absolute terms but remain meaningful, with US imports exceeding US$1 billion in 2025. Like Saudi Arabia, much of this trade falls under “industrial supplies and materials.”

Because exemptions are product-specific, Oman’s exposure depends heavily on tariff classification. For Omani exporters, operational risks are particularly important. If goods are trans-shipped, processed, or repackaged before entering the US, rules of origin and documentation requirements become more critical under a universal surcharge system.

In this environment, compliance discipline (including accurate classification and origin certification) becomes as important as price competitiveness.

Kuwait

Kuwait’s exports to the US are also energy-linked, with official data showing ongoing flows of crude and refined products. Energy exemptions under Section 122 limit direct exposure to the surcharge.

However, refined product flows can shift depending on US refinery demand and global supply conditions. For example, US Gulf Coast refiners have periodically increased imports of fuel oil from Middle Eastern suppliers when other sources tightened. In such cases, the design of exemptions for specific product categories becomes commercially significant.

For Kuwait, as with Saudi Arabia, the primary risk is tied to energy market volatility rather than the 15 percent surcharge itself.

Practical business guidance for Gulf-based firms

The Supreme Court ruling removes the legal basis for the previous tariff regime that allowed the US administration to quickly impose, raise, suspend, or threaten tariffs under emergency powers. However, the shift to Section 122 does not mean tariffs are going away. Instead, it replaces rapid emergency action with a broad 15 percent surcharge and signals that more structured investigations may follow. The administration’s broader goals, reshoring production, demanding trade reciprocity, and reducing trade deficits, remain unchanged.

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For non-Gulf MENA exporters, the key question is whether their products fall within the exempt categories. If exports to the US are mainly energy, certain minerals, or goods already covered under national security tariffs, the impact may be limited. However, companies exporting textiles, consumer goods, light manufacturing products, or other non-exempt items could face the full 15 percent surcharge.

For firms operating on tight margins or supplying large US retailers under fixed seasonal pricing contracts, this can significantly reduce profitability.

Even where national trade volumes with the US appear relatively small, specific sectors may depend heavily on US demand. In those cases, tariffs can affect employment, cash flow, and foreign exchange earnings in a concentrated way, making the impact much larger at the industry level than national statistics suggest.

The region’s biggest risk remains indirect. The World Bank has repeatedly warned that MENA’s growth outlook depends heavily on global conditions. Tariff escalation increases uncertainty in financial markets, raises risk premiums, and may delay investment decisions. For Gulf economies in particular, the most important transmission channel is energy demand. In previous trade tensions, oil prices reacted quickly to fears of slower global growth. Even if Gulf energy exports are exempt from tariffs, weaker global demand can still affect revenues and fiscal planning.

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Another important factor for businesses is China. Chinese authorities have stated they are reviewing the implications of the US decision and have voiced concerns about unilateral tariffs. If US–China trade tensions escalate again through Section 301 investigations or additional restrictions, the effects could extend beyond direct US tariffs.

MENA businesses involved in trade with Asia, infrastructure projects, logistics corridors, or energy exports to China could feel secondary impacts if global trade flows slow or financing conditions tighten.

For companies operating in the region, the takeaway is straightforward: even if your products are not directly targeted by US tariffs, you may still face higher volatility in demand, pricing pressure, tighter financing, and supply chain disruptions. Businesses should therefore plan for both direct tariff exposure and broader macroeconomic spillovers.

Forward scenarios

Temporary stability

In this scenario, the 15 percent Section 122 surcharge remains in place for the full 150-day period, with no immediate escalation. During this window, the administration focuses on negotiations with key trade partners while maintaining a baseline “tariff wall.”

Under this outcome, trade policy remains restrictive but relatively predictable in the short term. Existing trade agreements may continue to operate, and businesses would face a known 15 percent surcharge rather than rapidly changing rates. For Gulf exporters, this would mean managing a stable, though higher, cost environment while monitoring negotiations.

Escalation via investigations

In this scenario, the administration moves quickly to launch or accelerate investigations under Section 301 (unfair trade practices) and Section 232 (national security). This would gradually replace the temporary surcharge with targeted, sector-specific tariffs.

By late 2026, the tariff landscape could become more layered and complex, with different rates applied to specific industries and countries. Existing Section 301 and Section 232 tariffs would remain in force, while new measures could be added.

For Gulf economies, the main risk under this scenario is not the temporary 15 percent surcharge, but the possibility that particular sectors become targets. This could include:

• Downstream petrochemicals;

• Aluminium derivatives;

• Electronics components; and

• Industrial inputs.

Targeted investigations could create longer-lasting trade barriers than the current temporary surcharge.

Transactional carve‑outs

In this scenario, Gulf states use strategic investment, supply-chain partnerships, and procurement agreements to secure exemptions, quotas, or preferential treatment from the United States.

The US administration has shown a preference for transactional trade diplomacy. Countries that offer investment commitments, supply-chain cooperation, or alignment with US strategic priorities may be able to negotiate carve-outs from broader tariff measures.

For Gulf states such as the UAE and Qatar, participation in US-aligned supply-chain initiatives (including technology, energy, and infrastructure cooperation) may strengthen their negotiating position. This pathway would not eliminate tariffs entirely but could reduce exposure in specific sectors.

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