Startup News Digest 02/27/26
The Big Story: Trump pivots to new tariffs after Supreme Court loss
Following a Supreme court loss invalidating global tariffs, the Trump administration shifted aggressively to different tariff authorities, left unanswered questions about whether they will refund the illegal tariffs, and lobbed threats at trading partners, continuing a volatile global trade environment that complicates U.S. startups’ plan to grow globally.
Last week, the Supreme Court struck down President Donald Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The Court did not address how previously collected IEEPA tariffs—estimated to be as much as $175 billion—should be refunded to businesses. To resurrect their tariff regime, the administration invoked a different—and still legally dubious—authority to impose a new 10 percent global tariff via executive order, later announcing (yet-to-be implemented) plans to raise it to the statutory maximum of 15 percent. That never-before-used authority, Section 122 of the Trade Act of 1974, allows tariffs of up to 15 percent for 150 days—without needing congressional approval—to address a “large and serious” balance-of-payments deficit. In his State of the Union address on Tuesday, Trump said “congressional action will not be necessary” to maintain the tariffs, highlighting the administration's intent to act unilaterally and their inability to convince the Congress to pass their unpopular tariff agenda.
Key administration figures expect the Section 122 tariffs to function as a bridge while they pursue different authorities more likely to stand up to legal scrutiny. To that end, the U.S.Trade Representative plans to initiate new Section 301 investigations, which require formal findings before trade remedies—such as tariffs—can be imposed. These developments appear to be chilling productive conversations with global trading partners as lawmakers from the EU, Taiwan, and elsewhere raise questions about the status of agreements reached under the duress of the IEEPA tariffs.
While the Court’s decision is a win for the rule of law and constraining unilateral tariff power, the administration’s quick pivot and follow-up threats are injecting even more uncertainty for U.S. startups and trading partners. For startups, stable and predictable trade policy determines whether they can confidently enter foreign markets, price products, hire workers, and attract investment. It is unclear whether trade agreements—some of which contain digital trade provisions—struck under the pressure of IEEPA tariffs will hold, whether continued tariff escalation will invite retaliatory digital trade barriers from partners, and what effect this will have on the broader effort to secure a permanent ban on digital tariffs at the World Trade Organization next month.
Policy Roundup:
Senators introduce long-awaited SBIR/STTR reauthorization bill. Senate Small Business Chair Joni Ernst (R-Iowa) and Ranking Member Ed Markey (D-Mass.) introduced bipartisan legislation this week to reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, five months after the programs expired. Negotiations had paused several times over how to address “multi-award winners,” with policymakers ultimately leaving it to each of the 11 participating agencies to set their own criteria—a critical compromise after the Defense Department warned it could begin shutting down operations and redirecting remaining funds from the roughly $3 billion it distributes annually through SBIR/STTR. The lapse has already created uncertainty for startups that rely on SBIR as a key source of non-dilutive early-stage R&D funding. Congress should move quickly to restore stability to this critical innovation pipeline.
FTC won’t enforce kids privacy law for age verification data collection. The Federal Trade Commission (FTC) released a policy statement Wednesday outlining how they will approach Children’s Online Privacy Protection Act enforcement for online services’ use of age verification technologies. That law greatly limits what data online services can collect and how it can be used, and it generally prohibits the kinds of information collection needed to perform age verification. The policy statement is another nudge towards expensive and imperfect age verification technologies.
FTC appeals decision tossing aside new merger filing requirements. Last week, the Federal Trade Commission (FTC) appealed a federal district court ruling that vacated their 2025 expansion of Hart-Scott-Rodino merger filing requirements. The court found that the agency failed to justify the rule through a cost-benefit analysis. As we explained in our comments during the rulemaking process, the updated form adds unjustified costs and delays to premerger filings—a view the district court agreed with.
Senators introduce legislation to rein in government spying program. A bipartisan group of senators unveiled legislation on Monday that would dial back powers under Section 702 of the Foreign Intelligence Surveillance Act, as Congress faces an April 20 deadline to renew the authority. Section 702 allows the government to collect Internet communications targeting non-U.S. persons abroad and has been at the center of international legal challenges that ended in disrupted cross-border data flows relied on by startups. Its last reauthorization in 2024 greatly expanded the entities that could be considered an ‘electronic communication service provider’—and who could therefore be compelled to participate in surveillance—to conceivably any company, including startups.
On the Horizon:
TUE 03/03: The Senate Commerce subcommittee on science, manufacturing, and competitiveness will convene a hearing to examine how AI can improve safety, productivity, and care at 10:15 AM ET.
WED 03/04: The House Education and Workforce subcommittee on workforce protections will convene a hearing to discuss how technology can support safer workplaces and workforce protections as AI adoption grows at 10:15 AM ET.
Startup Roundup:
#StartupsEverywhere: Durham, North Carolina. Based in Durham, North Carolina, Ver Coaching utilizes virtual reality to help athletes refine their visual skills and enhance their mental performance. We sat down with founder Michael Halpert and discussed grants that helped launch the platform, patents, accessibility and educational barriers, and the future of Ver Coaching.