Implications of the Supreme Court Tariff Ruling on Southeast Asia

The much-anticipated US Supreme Court ruling on President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to implement his reciprocal tariff regime has been handed down. In a sharp rebuke to the US administration, the nation’s highest court has ruled that Trump’s use of the IEEPA authority was unconstitutional. Other tariffs implemented under separate statutes, such as the sector-specific Section 232 steel and aluminium tariffs, are unaffected.

What are the broader implications of the Supreme Court’s decision on Southeast Asia and beyond? Three points are especially noteworthy:

First, the practical impact — at least in terms of the reciprocal tariff levels levied in August 2025 — is likely to be negligible. Vietnam, for instance, should not entertain any realistic hope that its reciprocal tariff of 20 per cent will disappear as a result of the Supreme Court decision. As this author has previously argued, significant executive authority has been vested in the office of the US president over the decades, meaning Trump has other tariff tools at his disposal.

Given telltale signals during Supreme Court oral arguments last November, Trump’s trade officials were fully prepared for the likelihood of an adverse ruling. Now that it has come to pass, they will simply move forward to recreate the reciprocal tariff regime under one or more alternative authorities, such as Section 301 or Section 232. Indeed, after the court ruling, Trump wasted little time in announcing a global 10 per cent tariff (later increased to 15 per cent) under a separate authority – Section 122.

Using these other procedures will be more cumbersome—that is why IEEPA was used in the first place—but they ultimately should be successful in stitching together a tariff patchwork that at least approximates (and perhaps replicates) the reciprocal tariff regime implemented in August. The immediate announcement of the Section 122 tariff is just the first step. For Southeast Asia, and beyond, the headline takeaway is that the Supreme Court ruling is unlikely to provide substantial or enduring relief from the reciprocal tariffs.

The second key takeaway is that several substantial uncertainties have now been introduced into the equation. For businesses, life could grow more complicated.

As the US works to reconstitute the reciprocal tariffs, questions arise over the status of any of the so-called trade “deals” agreed by a number of countries to reduce the threatened reciprocal tariffs enacted under the now invalidated IEEPA authority. Is it safe for companies to assume that these agreements will remain unaffected and fully in force, or could they be renegotiated or even abrogated? If so, business plans and operational decisions based on those agreements would be out the window.

Additional uncertainties will arise for Southeast Asian and other companies as a result of the changing patchwork—and changing requirements—of tariff authorities the US will now turn to. For example, the just-announced Section 122 global tariffs can only be applied for a maximum of 150 days. What happens after that is unknown, although an extension is possible, subject to Congressional approval

Other complications and uncertainties involve the possibility of rebates of previously paid tariffs under the reciprocal regime. Such a massive tariff rebate scheme has never been contemplated, let alone implemented, in US history. The mechanisms, processes and procedures for such an eventuality—should it materialise—are yet to be determined.

… the Supreme Court’s adverse ruling might ultimately prove to be just a temporary blip that the administration quickly sidesteps. But if we have reached “Peak Trump”, Southeast Asia could find itself in a stronger position as it navigates trade relations with the US.

Questions would arise over who actually “paid” the tariff in the first place. Faced with the reciprocal tariff shock, US importers and foreign export partners were free to arrive at any commercial agreement that suited their needs. In many instances, exporters in Southeast Asia and elsewhere arguably “paid” the tariff by reducing their price to US importers. 

How will all this get worked out if companies secure refunds for those tariffs across tens of thousands of such transactions? This is anyone’s guess, but it is safe to assume it will be a complicated mess.

Finally, perhaps the most interesting and consequential question arising over the Supreme Court’s decision is whether this marks the first substantial crack in Trump’s heretofore unchallenged ability to essentially do whatever he wants on trade.

The recent largely symbolic vote in the House of Representatives against Trump’s Canada tariffs, in which several Republicans crossed the aisle and joined their Democratic colleagues, might prove to be an important bellwether. With this Supreme Court loss now in the books, will fissures in Trump’s previously unchallengeable authority within the party now start to appear and spread? A strong Democratic showing in the upcoming mid-term elections would only strengthen the resistance. After two years of deference, will Congress begin to reassert its role in trade policy?

For Southeast Asia, and other regions and countries that have felt the brunt of Trump’s tariff bazooka, a related question creeps into the conversation. If Trump’s authority at home has been shaken, does a more forceful stance against Trump’s trade policies now make sense? Of course, the Supreme Court’s adverse ruling might ultimately prove to be just a temporary blip that the administration quickly sidesteps. But if we have reached “Peak Trump”, Southeast Asia could find itself in a stronger position as it navigates trade relations with the US.

2026/54