Southeast Asia caught between relief and new risks after US court strikes down Trump tariffs
analysis Asia
Southeast Asia caught between relief and new risks after US court strikes down Trump tariffs
Southeast Asian countries could benefit from a temporary lowering of tariffs, but analysts warn there are other means United States President Donald Trump can use to keep his trade agenda alive.
JAKARTA: A temporary reprieve, or fuel on an already heated political landscape? The United States Supreme Court’s recent ruling on President Donald Trump’s tariffs is being cast in starkly different lights across Southeast Asia, say experts.
Analysts say the decision is poised to send uneven shockwaves through the region, with its political and economic fallout likely to play out differently across different countries, from Bangkok to Manila.
“The only thing certain is that there will be uncertainty,” Lawrence Loh of the National University of Singapore (NUS) Business School told CNA, adding that the Supreme Court judgment would not stop Trump from seeking other means to keep his trade agenda alive.
Last Friday (Feb 20), the US Supreme Court ruled that Trump’s use of the International Emergency Economic Powers Act to impose reciprocal tariffs last year without congressional approval was unconstitutional.
The court’s decision prompted Trump to invoke a different law to sign an order imposing a global 10 per cent duty on goods imported into the US. Trump has announced that he intends to raise the rate to 15 per cent, but he has not yet formalised that with a new directive.
The sweeping 10 per cent tariff, which came into effect on Tuesday, is however temporary and can only last 150 days before Congress either extends the timeframe or steps in.
Analysts said most Southeast Asian countries are likely to see the court ruling as a reprieve, as nearly all had previously been slapped with tariffs of at least 19 per cent.
Businesses in these economies, they added, could enjoy a temporary lift as exporters move quickly to take advantage of the lower duties.
Singapore is the only Southeast Asian country to have seen its tariff rate remain in recent days, standing at the original 10 per cent.
However, Deputy Prime Minister Gan Kim Yong recently urged the country to prepare for a fundamentally changed global trade environment.
“It is important for us to continue to remind ourselves … we need to prepare for the long term, and this is the new world that we are facing,” he said.
Meanwhile, countries that have already inked reciprocal trade agreements with Washington in their months-long efforts to seek reduced tariff rates from those first announced in April 2025 are facing mounting pressure from political opponents and critics at home to renegotiate for more favourable terms.
Loh of NUS said that those attempting to capitalise on the ruling should note that the situation could change again soon, as Trump could use other legal provisions to get his tariffs in place.
The temporary 10 per cent tariff was imposed using section 122 of the US Trade Act of 1974 which authorises the president to impose temporary import surcharges of up to 15 per cent when the US faces a serious balance-of-payments deficit or rapid dollar depreciation.
Trump has also authorised the United States Trade Representative to launch an investigation against practices that burden or restrict US commerce under Section 301 of the same trade act and take necessary actions, including tariffs, quotas and other restrictions to counter such practices.
The US president could also resort to using non-trade barriers such as import quotas, strict licensing or complex rules of origin more aggressively.
“The pursuit of trade restrictions in whatever form by the US presidency is relentless and probably unstoppable,” said Loh.
CALLS FOR RENEGOTIATIONS MOUNTING IN INDONESIA, MALAYSIA
The US tariff agreements with Indonesia and Malaysia have drawn widespread criticism in both countries, with detractors arguing that the deals disproportionately benefit Washington while undermining national sovereignty and economic independence.
Malaysia signed its agreement in October, while Indonesia inked its pact last week.
Although the arrangements allow certain goods such as Indonesian palm oil and Malaysian semiconductors to be exempted from US tariffs, they also commit Indonesia and Malaysia to granting significant preferential market access to US products.
These concessions include exemptions from a range of certifications, standards and other requirements the two Southeast Asian nations typically imposed on imports from other countries.
The agreements further stipulate that Indonesia and Malaysia could face higher tariffs if they enter into new trade pacts deemed to jeopardise Washington’s “essential interests” – a clause many observers interpret as a reference to China.
“I doubt Indonesia has ever had trade agreements this toxic,” Bhima Yudhistira of the Indonesian think tank Center of Economic and Law Studies (CELIOS) told CNA. On Monday, the think-tank announced that it is considering launching a legal challenge to the US-Indonesia trade agreement.
The agreement needs to be ratified by the parliaments of both countries for it to take effect. With no clear opposition to President Prabowo Subianto’s 10-party coalition, the deal is widely expected to pass Indonesia’s House of Representatives with little resistance.
In Malaysia, however, the path forward appears far less certain.
According to Malaysian media, five members of parliament from the opposition Perikatan Nasional coalition have filed a motion with the Federal Court seeking a ruling on the agreement’s validity, alleging that it was signed without proper parliamentary approval.
Criticism has also emerged from within the ruling coalition. On Monday, four MPs from Prime Minister Anwar Ibrahim’s Parti Keadilan Rakyat called for all steps toward ratifying the US-Malaysia reciprocal trade agreement to be suspended.
Despite mounting calls for the deals to be renegotiated or scrapped, officials in both countrie