The United States Supreme Court’s decision to strike down President Donald Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA) has sent tremors far beyond Washington. In a 6–3 ruling, the Court curtailed one of the most expansive assertions of presidential trade authority in modern history, reshaping not only American constitutional law but also the strategic calculations of trading partners across Southeast Asia.
For countries such as Indonesia, Malaysia, Cambodia and the Philippines, which negotiated bilateral trade arrangements under the shadow of IEEPA-based tariffs, the ruling presents a profound dilemma: what becomes of agreements forged under leverage that the Court has now declared unlawful?
The case centered on President Trump’s use of IEEPA, a 1977 statute designed to grant the executive branch emergency economic powers in times of national crisis. The administration invoked the law to impose sweeping tariffs under the banner of economic security, using the duties as negotiating leverage in bilateral trade talks.
Writing for the majority, Chief Justice John Roberts concluded that nothing in IEEPA’s text authorized the president to unilaterally impose across-the-board tariffs. The majority opinion framed the move as a constitutional overreach, reasserting Congress’s primacy in matters of taxation and trade regulation.
In dissent, Justice Brett Kavanaugh warned that the decision failed to grapple with the practical consequences for existing trade arrangements. Deals negotiated with the United Kingdom, China, Japan and several ASEAN nations were left in legal limbo, he noted, raising questions about continuity and reliance.
The immediate legal effect was clear: the IEEPA tariffs were void. But the geopolitical aftershocks are only beginning.
The IEEPA tariffs had become the principal instrument in Washington’s bilateral trade diplomacy. Faced with elevated duties—some announced under what the administration branded as “Liberation Day” rates—Southeast Asian governments chose negotiation over confrontation.
Indonesia’s case is the most striking. On February 19, one day before the Court’s ruling, Jakarta signed a reciprocal trade agreement with Washington during President Trump’s Board of Peace summit. Under the deal, Indonesia committed to eliminating tariffs on 99 percent of American goods, dismantling non-tariff barriers and lifting export restrictions on critical minerals. Indonesian and American companies simultaneously inked 11 commercial agreements worth $38.4bn.
In exchange, the United States reduced tariffs on Indonesian goods to 19 percent, down from an earlier 32 percent rate.
The Philippines negotiated its rate from 20 percent to 19 percent. Cambodia and Malaysia secured identical 19 percent levels. None of these arrangements were treaties ratified by the Senate. They were executive agreements—products of presidential authority now deemed invalid.
For these governments, the legal rug has been pulled from under their side of the bargain.
President Trump’s response was swift. Within hours of the ruling, he announced a new 15 percent global tariff under Section 122 of the Trade Act of 1974. Unlike IEEPA, Section 122 allows temporary duties—capped at 15 percent—for up to 150 days to address balance-of-payments emergencies.
This authority is narrower, both in scope and duration. It requires procedural steps and is subject to judicial scrutiny. In practical terms, it sets a new ceiling lower than the 19 percent rates Southeast Asian countries had just accepted.
Treasury Secretary Scott Bessent argued that alternative statutory tools could deliver “virtually unchanged tariff revenue” in 2026. But Section 122 is time-limited. Section 301 investigations require findings of unfair trade practices. Section 232 national security tariffs demand evidentiary justification.
The structural constraints are real. IEEPA offered broad discretion with minimal procedural friction. The replacement toolkit is fragmented and slower.
Complicating matters further is the fate of approximately $160bn in IEEPA duties already collected. The administration has signaled it does not intend to voluntarily process refunds, leaving importers to pursue litigation.
This decision keeps uncertainty alive. Even as the legal basis for past tariffs has evaporated, the financial consequences remain unresolved.
The administration’s message appears twofold: while the ceiling on tariff authority may have fallen, Washington intends to preserve maximum leverage through alternative statutes and procedural complexity.
For ASEAN governments, the uncertainty cuts both ways. They must decide whether to uphold concessions made under duress or to treat the ruling as a renegotiation opportunity.
Trade negotiations over the past year have not occurred in isolation. Indonesia’s agreement coincided with President Prabowo Subianto’s participation in the Board of Peace and his pledge to deploy up to 8,000 troops to a Gaza stabilization mission. Vietnam joined the same forum, widely interpreted as a diplomatic overture toward improved trade terms.
These linkages suggest that tariff diplomacy has merged with security commitments. Trade concessions were embedded within a broader strategic relationship with Washington.
Unwinding tariff arrangements now could reverberate beyond customs schedules. It could complicate defense cooperation, mineral supply chains and diplomatic alignments.
The Tax Foundation estimated that the IEEPA tariffs, had they remained in place, would have reduced US GDP by 0.3 percent and generated $1.4 trillion in revenue over a decade. Their removal offers short-term relief to American importers and consumers.
Yet Section 232 tariffs on steel, aluminium and automobiles remain intact. Section 301 investigations targeting specific sectors could restore targeted pressure.
For ASEAN exporters, the landscape remains volatile. The pre-2025 status quo has not returned. Instead, a partial reset has created a window of reduced asymmetry—but not certainty.
Domestic politics in the United States further complicate forecasting. President Trump denounced the majority justices as a “disgrace to our nation,” while Vice President JD Vance characterized the decision as “lawlessness from the court.”
However, Republican lawmakers have not presented a united front. Senator Rand Paul praised the ruling as a defense of constitutional order. Senator Mitch McConnell stated unequivocally that the IEEPA tariffs were illegal.
If the administration seeks congressional authorization to reimpose tariffs above 15 percent, it will confront internal fractures within its own party.
For Southeast Asian governments, this division matters as much as the statutory nuances. The durability of US tariff policy now depends not only on executive ambition but on legislative arithmetic.
ASEAN governments are pragmatic. They recognize the enduring importance of access to the US market. Open confrontation carries risks, particularly when Washington retains alternative instruments of trade enforcement.
Yet pragmatism also entails reassessment. If the credible threat of 32 percent tariffs has vanished, the logic underpinning deep unilateral concessions weakens.
Some governments may quietly slow implementation of concessions, citing technical reviews. Others may seek clarifications or amendments. None are likely to openly repudiate agreements—but all will recalibrate.
The US-ASEAN Business Council’s description of the ruling as creating “uncertainty and confusion” rather than a “deal breaker” captures the prevailing mood. Commercial ties remain robust. Supply chains are deeply integrated. But the negotiating table has shifted.
Beyond Southeast Asia, the ruling signals a reassertion of constitutional boundaries in US trade policy. It reminds allies and adversaries alike that executive authority is not limitless.
For countries that structured economic diplomacy around direct engagement with the White House, the message is sobering: congressional politics and judicial review remain decisive constraints.
At the same time, the administration’s pivot to Section 122 demonstrates that tools remain available. Even temporary 15 percent tariffs can exert pressure during sensitive negotiations.
In the immediate term, the practical effects will unfold through litigation, regulatory guidance and diplomatic dialogue. Importers will seek refunds. Trade ministries will analyze statutory language. Lawmakers will debate whether to codify broader tariff authority.
For Indonesia, Malaysia, Cambodia and the Philippines, the decision opens a strategic pause—a moment to reconsider what was conceded and what might yet be renegotiated.
The asymmetry of bargaining power has narrowed, if only slightly. But uncertainty remains the dominant condition.
The Supreme Court’s ruling is thus neither a decisive victory for free trade nor a collapse of tariff diplomacy. It is a recalibration—a constitutional correction that ripples through supply chains and cabinet rooms alike.
In Washington, the separation of powers has reasserted itself. In Southeast Asia, negotiators are quietly recalculating.
