Supreme Court Blocks Trump’s Tariffs on Vietnam Trade
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 per cent tariff has been introduced under Section 122 of the Trade Act of 1974, with President Trump seeking to raise it to 15 per cent. On 20 February 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. Get tailored support with tariff analysis, product classification, origin requirements, sourcing structures, and customs exposure. 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 28 December 1977, is a US federal law that grants the president the authority to respond to an unusual and extraordinary threat from abroad that targets US national security, foreign policy, or the economy. Citing the law, the Trump administration implemented five corresponding tariff measures, including: Trade deals negotiated with foreign countries pursuant to IEEPA. Rulings of the US Supreme Court on 20 February 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 authorise the president to impose tariffs. Although IEEPA permits emergency measures such as embargoes and asset freezes, tariffs are not listed among the authorised 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” – Pritesh Samuel, 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: Issuance of an Executive Order terminating the IEEPA tariffs: In response to the Supreme Court’s decision, the US President issued 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
