US Trade Tariff Explainer - Australian Sheepmeat

What has changed? 

On February 20, 2026 the United States terminated the reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in April 2025 and announced a new global 10 per cent Temporary Import Surcharge.  

This new surcharge entered into force on Tuesday 24 February, replacing the IEEPA -based tariffs. The IEEPA tariffs were invalidated following court rulings which found the legislation did not provide authority for tariffs to be imposed in the manner used by the US Administration. 

Why did this change happen? 

The 2025 tariffs were introduced using the International Emergency Economic Powers Act (IEEPA) (1977) as part of the US Administration’s broader global tariff package, following the declaration of two national emergencies. 

These tariffs were subsequently challenged in US courts. The US Court of International Trade found the IEEPA did not provide authority for tariffs to be imposed in this way and ordered an injunction.  

A Federal Appeals Court granted a temporary administrative stay at the request of the US Administration while the matter proceeded through the courts.  

On February 20 the US Supreme Court ruled to uphold the lower court’s finding. 

Following the Supreme Court ruling, the US Administration introduced a revised approach using an alternative legislative pathway under Section 122 of the US Trade Act (1974).  

Section 122 enables the US Administration to impose temporary tariffs for up to 150 days without Congressional approval to address balance-of-payment concerns.  

Using this authority, the US Administration introduced a new global 10 per cent Temporary Import Surcharge, applicable to most goods imported to the United States. 

The US President subsequently announced, in a social media post, that the US Administration would increase this to 15 per cent. However, at the time of writing this has not been formalised through an executive instrument.  

What does this mean for Australian sheepmeat? 

At present a 10 per cent tariff rate applies to Australian sheepmeat entering the United States under the Temporary Import Surcharge. 

SPA will continue to monitor developments closely and work with government and industry partners to understand any potential implications.  

Why is the US market important? 

The United States is one of Australia’s most significant markets for lamb.  According to Meat & Livestock Australia, the US was the second largest export destination for Australian sheepmeat by export volume, with 99,773 tonnes shipped weight in 2025. 

How does this relate to the Australia–US Free Trade Agreement (AUSFTA)? 

Australia and the United States have operated under the Australia–United States Free Trade Agreement (AUSFTA) for more than two decades.  For Australia, this latest Temporary Import Surcharge sits alongside existing AUSFTA tariff arrangements. 

The Temporary Import Surcharge has been applied on a global basis rather than targeted at individual trading partners. 

What happens next? 

Sheep Producers Australia will continue to work with Australian Government and industry stakeholders to further understand the implications of these recent developments for Australian sheep producers and exporters.