US Supreme Court Blocks Trump’s Tariffs: Implications for Vietnam–US Trade and Businesses

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The US Supreme Court has ruled that reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are unlawful. For Vietnam-invested businesses, this creates short-term uncertainty and longer-term trade management considerations, as a new 10 percent tariff has been introduced under Section 122 of the Trade Act of 1974, with President Trump seeking to raise it to 15 percent.

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On February 20, 2026, the US Supreme Court ruled that the Trump administration lacked statutory authority under IEEPA to impose broad reciprocal tariffs. The decision invalidated key tariff measures but did not automatically unwind all trade restrictions.

The ruling has generated immediate implications for global supply chains and cross-border commerce, particularly for export-oriented economies such as Vietnam.

As bilateral trade negotiations continue and high-level diplomatic engagement deepens, businesses in Vietnam must assess how evolving US trade enforcement mechanisms could affect pricing, compliance, investment planning, and long-term market access.

What happened?

The US Supreme Court ruled against two tariff measures that President Donald Trump’s administration pursued in a sweeping manner, with the IEEPA being the legal basis.

What are Trump’s IEEPA tariff measures?

The IEEPA, enacted on December 28, 1977, is a US federal law that grants the president the authority to respond to an unusual and extraordinary threat from abroad that targets U.S. national security, foreign policy, or the economy.

Citing the law, the Trump administration implemented five corresponding tariff measures, including:

  • Reciprocal tariffs;
  • Fentanyl tariffs;
  • Russian oil tariffs;
  • Brazil tariffs; and
  • Trade deals negotiated with foreign countries pursuant to IEEPA.

Rulings of the US Supreme Court on February 20, 2026

Under the latest ruling, the court ruled that the following tariffs are illegal:

  • The reciprocal tariffs imposed to match the value of trade barriers set by other countries; and
  • The 25 percent tariff on some goods from Canada, China, and Mexico for the supposed failure to curb the flow of fentanyl into the US.

The reasoning behind the court’s ruling is:

  • The IEEPA does not expressly authorize the president to impose tariffs.
  • Although IEEPA permits emergency measures such as embargoes and asset freezes, tariffs are not listed among the authorized tools.

The Supreme Court ruling introduces legal clarity in one sense, but commercial uncertainty in another. While it narrows the president’s ability to sustain sweeping tariffs indefinitely, companies that reshaped supply chains over the past year are now reassessing whether those moves were durable adjustments or temporary reactions to policy shock. That ambiguity is already weighing on capital deployment, particularly for manufacturing projects with multi-year timelines. At the same time, firms need to remain clear eyed that uncertainty itself is becoming the baseline, and delaying projects indefinitely in hopes of policy clarity is not a viable long term strategy” – Dan Martin, Co-head of Business Intelligence, Dezan Shira & Associates

Corresponding actions by the US government

Although the ruling did not automatically invalidate the tariffs, it has triggered immediate executive actions:

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  • Issuance of an Executive Order terminating the IEEPA tariffs: In response to the Supreme Court’s decision, the aissued an executive order terminating the collection of additional ad valorem duties that had been imposed under IEEPA, directing federal agencies to end those tariff actions as soon as practicable.
  • Continuation of suspension on US de minimis treatment: Alongside the new surcharge, a separate executive order maintained the suspension of duty-free de minimis treatment, meaning low-value imports still are subject to duties.
  • US Customs stops collecting ‘illegal’ tariffs: The US Customs and Border Protection agency announced it will cease collecting tariffs imposed under the IEEPA starting at 12:01 a.m. EST on Tuesday, February 24, 2026. In a message to shippers via its Cargo Systems Messaging Service (CSMS), the agency stated it will deactivate all tariff codes linked to previous IEEPA-related orders from the given date onward. It also noted that the collection halt does not affect any other tariffs imposed by Trump, including:
    • Tariffs under the Section 232 national security statute; and
    • Tariffs under the Section 301 unfair trade practices statute.

The new global surcharge under Section 122

One day after the ruling, President Trump said he would raise the “10 percent worldwide tariff” to 15 percent, effective immediately. The administration is now invoking Section 122 of the Trade Act as the legal basis for the move, which permits the swift imposition of tariffs of 10 percent but limits their duration to 150 days.

The proclamation also outlines the exceptions for the surcharge, including:

  • Section 232 primacy: Products already covered by Section 232 tariffs, such as steel, aluminium, copper, lumber, and automobiles, are not subject to the surcharge if the 232 tariff applies;
  • USMCA preferences: Articles that enter duty-free under the USMCA remain exempt from the surcharge;
  • CAFTA-DR textiles: Textile and apparel products imported duty-free under the Dominican Republic-Central America Free Trade Agreement are also exempt; and
  • Annex II exceptions: Around 1,100 product codes are exempt from the surcharge under Annex II.