The global trade landscape shifted dramatically on February 20, 2026, when the U.S. Supreme Court held that the International Emergency Economic Powers Act (IEEPA) does not authorise the president to impose tariffs. This landmark ruling invalidated tariffs that had generated over $175 billion in revenue and triggered what could become the largest customs refund event in US history.
For businesses across the Asia Pacific region, the immediate question isn’t just what happened, it’s what happens next.
The Supreme Court Ruling
“IEEPA contains no reference to tariffs or duties, and until now no President has read IEEPA to confer such power,” the Court concluded. The decision struck down the “reciprocal tariffs” that had been imposed on countries worldwide, as well as the “fentanyl” tariffs targeting specific nations.
The administration’s response was immediate. President Trump issued a Proclamation under Section 122 imposing a 10% “temporary import surcharge” on products of all countries, effective February 24, 2026, for 150 days. On February 21, 2026, the President announced via social media his intention to raise the rate to 15%, the statutory maximum under Section 122, however, as of the date of publishing, CBP confirmed the rate remains at 10%, with no formal proclamation issued to implement the higher rate.
Critically, tariffs imposed under Section 232 and Section 301 remain in effect, meaning businesses still face a complex, multi-layered tariff structure.
What this means for APAC businesses
The shift from country-specific IEEPA rates to a flat 10% baseline under Section 122 creates immediate impacts, with potential for further increases:
Tariff Rate Changes: For countries previously exposed only to the baseline 10% IEEPA tariff – such as Australia, Singapore, and GCC members – tariffs currently remain at 10% under Section 122, though the administration has signalled intent to increase to 15%. Should this increase materialise, these markets would face a 5% tariff rise.
However, the Proclamation excludes certain goods, including goods previously exempted from IEEPA tariffs (e.g., United States-Mexico-Canda Agreement (USMCA) –qualifying goods from Canada and Mexico; goods subject to Section 232 tariffs; critical minerals; pharmaceuticals; certain electronics) and goods exempted from IEEPA tariffs under country-specific trade deals.
Bilateral Trade Agreements: The United States has reached agreements on reciprocal trade with Malaysia and Cambodia (October 26, 2025), El Salvador (January 29, 2026), Guatemala (January 30, 2026), and Argentina (February 5, 2026). The agreement with Cambodia includes a commitment by the US government to maintain reciprocal tariffs at 19% for originating goods from Cambodia, while Malaysia received similar treatment at a 19% rate.
The durability of these agreements remains uncertain. While other countries may be celebrating the decision, they may be reluctant to explicitly seek to abrogate or renegotiate agreements which could attract the ire of Trump.
The $175 Billion Refund Question: Neither the Supreme Court’s decision nor the Executive Order revoking the IEEPA tariffs addressed refunds, leaving the issue to renewed proceedings before the US Court of International Trade. While refunds are owed based on prior case law, the mechanics and timeline remain unclear, with some estimates suggesting 12 to 18 months for the process to unfold.
Understanding the Administration’s Tariff Toolkit
The White House has signalled its intention to build a more legally durable tariff architecture using multiple authorities:
Section 122 (Current Baseline): Section 122 authorises the president to impose a tariff of up to 15 percent “whenever fundamental international payments problems require special import measures,” and specifies that the president may impose the tariffs for only up to 150 days “unless such period is extended by Act of Congress”. The tariffs are scheduled to expire on July 24, 2026.
The 15% Question: While President Trump announced on February 21 his intention to increase Section 122 tariffs to the statutory maximum of 15%, the official CSMS guidance and CBP implementation on February 24 confirmed the rate at 10%. No formal proclamation has been issued to implement the higher rate, creating uncertainty about timing and whether the increase will occur. Businesses should model both the current 10% scenario and a potential 15% scenario in their planning.
Section 232 (National Security): The decision does not impact tariffs imposed under authorities other than IEEPA, including Section 232 duties on steel, aluminium, copper, automotive, and other products, and where they have been challenged in the past, the legal authority for imposing them has been upheld.
Section 301 (Unfair Trade Practices): The President has directed the Office of the United States Trade Representative to use its section 301 authority to investigate certain unreasonable and discriminatory acts, policies, and practices that burden or restrict US commerce.
Both Section 232 and Section 301 are considered more legally durable than Section 122, though they require formal investigative processes and findings before action can be taken.
Your Action Plan
Immediate Actions:
The businesses positioned to benefit most from potential refunds are those with clean, audit-ready data.
Start now
- Audit your entry history: Identify every entry that paid IEEPA duties by date, product, HS code, supplier country, and entry number. This baseline is essential for assessing both refund eligibility and Section 122 impact.
- Review commercial contracts: Examine tariff clauses, price adjustment mechanisms, change-in-law provisions, and Incoterms. Determine who bears the cost if tariffs drop due to refunds or are reimposed under different statutes.
- Coordinate with customs counsel: Preserve your rights on protests, liquidation status, and potential Court of International Trade filings.
Tactical Planning
- Model Section 122 impact: Calculate margin impacts under both the current 10% rate and a potential 15% rate scenario. The 5-percentage point difference could significantly affect product profitability and sourcing decisions. Update landed cost models accordingly.
- Monitor bilateral deal status: If you operate in markets that negotiated reciprocal trade agreements (Vietnam, Malaysia, Japan, South Korea, Cambodia), watch for clarity on whether those commitments hold under the new Section 122 framework.
- Assess supply chain exposure: If your products fall into sectors under Section 301 or Section 232 investigation (robotics, pharmaceuticals, wind turbines, digital services), begin scenario planning now.
Strategic Resilience
- Build supply chain optionality: The tariff environment remains highly elevated and volatile. ASEAN markets (Vietnam, Malaysia, Thailand) remain attractive for diversification, but new manufacturing capacity takes time to scale.
- Prepare for compliance complexity: The shift from IEEPA to Section 122, combined with ongoing Section 232/301 actions, creates operational headaches around classification, entry procedures, and protest rights. Product-specific and country-specific carve-outs will intensify the compliance burden.
Why Technology is your Competitive Advantage
In an environment where tariff regimes can change within hours – and where threatened rate increases may or may not materialise – manual processes and spreadsheets become liabilities. The winners in this new reality will be businesses that can:
- Track tariff changes in real-time across multiple statutory authorities
- Automatically update classifications as HS codes shift
- Model multiple tariff scenarios simultaneously
- Maintain audit-ready documentation for refund claims
- Pivot quickly as legal and policy landscapes evolve
This is exactly the environment that ONESOURCE Global Trade was designed for. Our platform provides:
- Real-Time Regulatory Intelligence: Automated tracking across Section 122, 232, and 301 regimes, ensuring you’re always working with current rates and exemptions.
- Scenario Planning Tools: Model tariff impacts across multiple trade lanes simultaneously –– so you can make informed sourcing and pricing decisions.
- Automated Compliance Workflows: Reduce manual errors and ensure consistent classification across your supply chain, even as rules change.
- Audit-Ready Documentation: Generate the clean, aggregated entry data that will position you first in line when refund procedures are announced.
The Bottom Line
The Supreme Court ruling didn’t eliminate tariff uncertainty – it transformed it, again. The administration has a number of other authorities it can use to try to replace the IEEPA tariffs, but they are more constrained. They either require greater process, such as investigations, or they are time limited.
For APAC businesses, this creates both risk and opportunity. Companies that wait for clarity will find themselves perpetually behind. Those that invest now in data infrastructure, scenario planning, and automated compliance workflows will have the agility to turn regulatory complexity into competitive advantage.
The refund process alone could return billions to businesses, but only those with clean data and proper documentation will be positioned to claim it quickly. Meanwhile, the 150-day clock on Section 122 tariffs is ticking, and new investigations under Section 232 and 301 are underway. And the threat of a further increase to 15% remains very real, even if it hasn’t materialised yet.
