Despite legal woes, Trump’s tariffs remain a challenge for South-east Asia

[SINGAPORE] On Feb 20, the US Supreme Court ruled that US President Donald Trump’s tariffs under the International Emergency Economic Powers Act (IEEPA) were unconstitutional.

The president criticised the decision and announced a standard universal tariff of 10 per cent – later 15 per cent – under Section 122 of the Trade Act of 1974. 

The immediate effects on South-east Asian economies were apparent. With the exception of Singapore and Timor Leste, most countries in Asean saw their effective tariff rates decrease.

Nonetheless, it is too early to celebrate this development. There are other US statutes that Trump can use as justification for future tariffs. 

Given the president’s warning to countries that try to “play games” with the court’s decision, overall risks are rising. Coupled with uncertainty over the status of trade deals with the US, it is important for Asean states to tread carefully. 

Short term: less credible US threats

There is no shortage of alternative justifications for tariffs under US law, even if Congress is too divided to pass a new law on the issue. 

On top of the Section 122 universal tariffs, Section 301 of the Trade Act of 1974, for example, allows the US to impose tariffs in response to “unjustifiable” and “unreasonable” trade practices by foreign governments. 

Section 232 of the Trade Expansion Act of 1962 is another significant statute, authorising the president to impose sectoral tariffs in response to trade actions by a foreign government that compromise US national security. In 2025 alone, Section 232 was used to justify tariffs on several categories of imports, including copper, automobiles and timber. 

The challenge for the Trump administration is that these statutes have key restrictions compared to IEEPA. 

The Section 122 tariffs are only effective for 150 days, following which they must be extended by Congress. Section 301 and Section 232 tariffs offer broader authority to impose tariffs, but require detailed investigations.

At present, there are ongoing Section 232 investigations for industries such as batteries, chemicals, plastics and telecommunications equipment, on top of Section 301 investigations into specific sectors in countries such as Brazil and China. Despite trade representative Jamieson Greer’s goal of accelerating these investigations, it will likely be several months before they conclude.

Trump’s penchant for issuing ad hoc tariff threats to achieve foreign policy goals is at odds with the thorough investigative process demanded by Section 301, Section 232 and other legal needs. He may still issue tariff threats, but they will be less credible in the short term.

Medium term: risks abound

In the medium term, the risks mount significantly in two areas: the culmination of sectoral tariff investigations, and the possibility of Trump resorting to more drastic measures. 

Some South-east Asian solar firms have had a taste of harsh US duties following a Department of Commerce investigation that ruled they had engaged in dumping subsidised solar panels into the US market. The June 2025 ruling saw duties ranging from 14.6 to more than 3,500 per cent on errant companies.  

A sequel to these duties is expected in late 2026, when the department concludes a similar investigation into solar cells and panels from India, Laos and Indonesia. On Feb 24, preliminary duties of between 81 and 146 per cent were announced on these countries, and the final duties could be even higher.

The wild card in this scenario is the president himself. He told reporters he believes he can “destroy (trade)” ties at will or even “impose a foreign destroying embargo”.

Trump ostensibly has no intention of giving up his tariff policy, claiming during his State of the Union address that he aims to use tariff revenue to replace income tax revenue. 

If he finds himself continually frustrated, he may utilise unorthodox rationales to regain his authority. 

One such tool is Section 338 of the 1930 Tariff Act, as several observers have warned. Better known as the Smoot-Hawley Tariff Act, the statute authorises the president to impose up to 50 per cent tariffs on countries that unreasonably discriminate against the US. 

It remains unclear if this justification will stand up to legal scrutiny, given that Section 338 has never been used to impose trade restrictions. Yet it remains an unfired weapon in the US trade arsenal that could well be drawn in the medium term.

Uncertainty over trade deals

Perhaps the biggest question for the region is what happens next, especially over the trade deals that were painstakingly negotiated previously.

Asean governments should recognise that tariffs are the new normal for doing business with America.

Even if the Section 122 tariffs expire in July, Section 301 and Section 232 investigations will likely yield new tariffs in the name of protecting the American economy. Future administrations would be forced to think twice before adjusting or removing them.

Diversification and expanding into other markets should continue to be a core component of regional trade policies, especially if Canada’s efforts to link the EU and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership succeed. 

Simultaneously, continued engagement with Washington is crucial to understand its trade concerns, as is securing agreements to prevent a complete rupture of trade relations.

The bottom line is that the Supreme Court’s tariff decision introduces new uncertainties, but does not reverse America’s protectionist trend. Regional governments should do what is necessary to manage this challenging new trade environment.

The writer is an associate research fellow with the US programme at the S Rajaratnam School of International Studies, Nanyang Technological University