Court rebuke won't end tariffs threat. Trump has fallbacks

South-east Asia can't bank on US Supreme Court ruling. It should negotiate carve-outs and could diversify its trading options.

- Shay Webster

The Trump tariffs aren't ending. But the headwinds they face are real - and getting stronger.

The US economy is shaky with a softening jobs market and persistent inflation, and voter disapproval of President Donald Trump's tariff policies is mounting. In a nod to political reality, the White House has begun rolling back some food tariffs to ease rising grocery prices. Most immediately, the Supreme Court appears poised to strip away his favourite tool.

When the court heard challenges to the International Emergency Economic Powers Act (IEEPA) on Nov 5, judges across the ideological spectrum appeared sceptical that Congress intended a 1977 emergency statute to let presidents rewrite America’s tariff schedule. A decision will come soon, and Southeast Asian partners would be wise to prepare for what comes next.

Should the court strike down or curtail IEEPA tariffs, capitals from Jakarta to Hanoi may be tempted to exhale. That would be a mistake. A judicial rebuke would remove a method, not a mindset - and nearly US$370 billion (S$480 billion) in Southeast Asian exports are at stake.

Even if the court reins in IEEPA, the Trump administration’s appetite to use trade pressure to reshape supply chains, bind partners to its economic security agenda, and extract concessions won't end. It will shift to slower but stickier tools that could recreate a significant portion of the IEEPA tariffs.

For Asean, that trades volatility for sustained, targeted pressure often sector-by-sector and tied to economic security demands. The rational response isn’t to relax, but to negotiate for carve-outs where possible while widening diversification options.

First, what changes. A curb on IEEPA would end President Trump’s ability to impose instant, economy-wide tariffs by emergency declaration. Gone too would be the “snapback” threat hanging over every deal - the promise to restore punitive rates if Washington determines a partner is non-compliant.