Supreme Court Strikes Down Trump Tariffs, But Trade War May Continue

The U.S. Supreme Court has delivered a significant blow to former President Donald Trump’s trade policy, ruling that his use of the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs was unconstitutional. However, the decision is unlikely to provide substantial or lasting relief from tariffs for Southeast Asia and other regions, as the administration has already signaled its intent to reimpose similar measures through alternative legal authorities.

Supreme Court Ruling and IEEPA

On February 20, 2026, the Supreme Court ruled 6-3 against the Trump administration’s use of IEEPA, a 1977 law intended to regulate commerce during national emergencies stemming from foreign threats . The court determined that the tariffs exceeded the powers granted to the president by Congress . The ruling specifically impacts the “reciprocal tariff regime” implemented in August 2025.

Limited Impact on Southeast Asia

Despite the ruling, the practical impact on Southeast Asia is expected to be minimal. Vietnam, for example, is unlikely to see the removal of its 20% reciprocal tariff . The Trump administration had anticipated an adverse ruling and prepared to recreate the tariff regime using alternative authorities, such as Section 301 or Section 232.

New Tariffs Already Implemented

Immediately following the Supreme Court’s decision, President Trump announced a global 10% tariff (later increased to 15%) under Section 122 . This demonstrates the administration’s commitment to maintaining trade barriers, regardless of the court’s ruling. Using these alternative procedures will be more complex than utilizing IEEPA, but the administration believes they will be successful in establishing a similar tariff structure.

Uncertainties and Potential Rebates

The shift in legal authority introduces several uncertainties for businesses. The status of trade “deals” agreed upon to reduce threatened tariffs under IEEPA is now unclear, potentially leading to renegotiations or abrogations . The changing requirements of different tariff authorities will also create complications for companies in Southeast Asia, and beyond.

the possibility of rebates for previously paid tariffs under the invalidated IEEPA regime raises complex questions. A massive tariff rebate scheme has never been implemented in U.S. History, and the mechanisms for such a process remain undefined . Determining who ultimately “paid” the tariff – importers or exporters who absorbed the cost – will be a significant challenge.

Political Implications and “Peak Trump?”

The Supreme Court’s decision may signal a potential shift in the balance of power between the executive branch and Congress regarding trade policy. A recent House vote against Trump’s Canada tariffs, with some Republicans joining Democrats, could be an early indication of growing resistance within the party . If this represents a weakening of Trump’s authority, Southeast Asia and other regions may identify themselves in a stronger position to negotiate trade relations with the U.S.

IEEPA and Broader Trade Policy

President Trump utilized IEEPA to address issues including the fentanyl crisis, immigration, and the trade deficit . Mexico implemented border security measures, and China and Canada were pressured to curb fentanyl imports as a result of these tariffs . The administration also credited IEEPA with contributing to a 17% decline in the trade deficit in goods between April 1, 2025, and December 31, 2025 .

While the Supreme Court’s ruling may be a temporary setback, the Trump administration remains committed to its trade policy agenda.