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

The US Supreme Court has ruled that reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, reshaping the legal framework underpinning recent US trade measures. For businesses operating in or invested in Vietnam, the decision introduces both short-term uncertainty and longer-term structural considerations in managing US trade exposure.

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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.

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.
• A temporary global surcharge of 15 percent: The administration simultaneously imposed a temporary global surcharge of up to 15 percent on imports under Section 122 of the Trade Act of 1974 to replace the invalidated IEEPA tariffs.
• 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 International Emergency Economic Powers Act 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.

Implications of the latest US tariff developments

Increased uncertainty for global trade

The Supreme Court’s decision striking down broad tariffs imposed under the IEEPA, though celebrated by many, has introduced uncertainty in how US trade policy will be shaped going forward. Many companies are unsure whether tariffs may be reintroduced under different legal authorities or remain subject to change.

Possibility of refund claims but no clear process visible

Although the ruling invalidates tariffs collected under IEEPA, the court did not provide explicit guidance on how refunds should be processed, leaving businesses to pursue lengthy legal action to reclaim duties paid.

Firms that paid IEEPA-based tariffs may be able to seek refunds, but must navigate complex US legal proceedings to do so, thereby increasing administrative and compliance costs.

Continuation of trade frictions through alternative statutes

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The US administration has indicated it will continue using other legal authorities, such as the Trade Act of 1974, to impose global tariffs, which may temporarily replace those invalidated, maintaining pressure on global trading partners.

Even after the court’s decision, exporters may still face 15 percent global tariff rates under new US measures, potentially affecting competitiveness in the American market.

Impact on existing and future trade agreements

The ruling impacts bilateral and multilateral trade deals negotiated under the previous tariff regime as partner countries reassess agreements amidst legal challenges and changing US policy.

In Vietnam’s context, Vietnam’s bilateral trade negotiations with the US or changes in tariff commitments could be influenced, prompting Vietnamese businesses and policymakers to monitor developments closely and possibly renegotiate terms.

Market and supply chain volatility

Businesses worldwide are facing volatility due to uneven tariff application, legal challenges, and shifting policies. This environment may slow investment, disrupt supply chains, and increase operational risk.

Vietnamese supply chains that integrate with US imports and exports may see delays or cost shifts as global companies adjust to ongoing tariff ambiguity and plan alternative routes or partners.

Reinforced the role of congressional authority over trade policy

By limiting executive use of emergency powers for broad tariff imposition, the ruling re-establishes Congress’s role in defining tariff authority, potentially leading to more deliberative, but slower, trade policy formation.

Legal clarity around trade policy authority could benefit Vietnamese stakeholders in the long run by providing a more structured negotiation process, though short-term adjustment costs may remain.

How Vietnam secures its positions amid recent developments

High-level diplomatic engagement strengthening bilateral relations

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Vietnam’s Party General Secretary To Lam visited Washington, D.C., from February 18-20, 2026, to attend the inaugural meeting of the Board of Peace for Gaza, where he met with US leaders, including President Donald Trump. The trip reaffirms the US view of Vietnam as a key partner and promotes cooperation in digital transformation, telecommunications, aviation, and investment.

About US$37.2 billion in agreements were signed to enhance connectivity and economic ties.

Progress on export control list removal

The US government has agreed to remove Vietnam from its strategic export control lists (D1–D3), easing restrictions on high-tech and dual-use technologies and signaling growing strategic trust between Hanoi and Washington.

Ongoing negotiations toward a trade agreement

Vietnam and the US continue negotiations on a trade agreement aimed at fostering balanced market access and deeper economic integration, with both sides expressing commitment to finalizing the terms in the near future.

Expansion of science, technology, and digital cooperation

High-level Vietnamese officials engaged US partners on enhancing cooperation in science, technology, digital transformation, and the semiconductor industries. This is a key focus for advancing Vietnam’s industrial upgrading and integrating into global high-tech value chains.

Strategic considerations for businesses

While the US Supreme Court’s ruling reshapes the legal basis of certain tariffs, it does not eliminate trade risk. For companies in Vietnam with US exposure, whether exporters, manufacturers, or foreign-invested enterprises, the priority should now shift from reacting to headlines toward strengthening strategic preparedness and operational resilience.

Recommended strategic actions:

• Reassess US market exposure: Conduct a tariff impact review across product lines, customers, and supply chains to quantify continued exposure under the 15 percent global surcharge and other US trade measures.
• Stress-test pricing and margin structures: Review transfer pricing models, export pricing, and long-term supply contracts to ensure margins remain sustainable under fluctuating tariff scenarios.
• Review contractual risk allocation: Examine Incoterms, tariff clauses, force majeure provisions, and change-in-law clauses to determine where tariff burdens legally fall.
• Evaluate refund feasibility: For businesses that paid IEEPA-based tariffs, assess whether pursuing refunds in the US is commercially viable given legal costs and administrative complexity.
• Continue to diversify export markets: Reduce overconcentration on the US market by accelerating access to alternative destinations under Vietnam’s FTAs (e.g., CPTPP, EVFTA, RCEP).
• Strengthen customs and trade compliance systems: Ensure HS classification accuracy, origin documentation integrity, and internal audit readiness amid heightened US trade scrutiny.
• Monitor bilateral negotiations and policy signals: Closely track Vietnam–US trade discussions, export control developments, and sector-specific measures that may affect high-tech, digital, or strategic industries.
• Integrate tariff risk into strategic planning: Treat trade policy volatility as a structural variable in board-level planning, investment decisions, and capital allocation.

For Vietnam-based businesses, resilience will depend less on predicting US policy shifts and more on building adaptive commercial, legal, and compliance frameworks that can absorb ongoing trade uncertainty.

Managing tax in Vietnam is critical for FDI companies to stay compliant with local regulations, GST requirements, and global standards such as IFRS, navigate complex filings, and apply correct tax treatments. A well-structured tax process helps to avoid penalties and stay 100% compliant.

Luy Doan

Assistant Manager, Tax

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