By Dr Mohd Safar Hasim
Malaysia and other trading nations are watching with bated breath as the United States Supreme Court prepares to weigh in on the legality of President Donald Trump’s sweeping tariff regime. The anticipation follows a dramatic ruling by the U.S. Court of Appeals, which declared Trump’s use of emergency powers to impose global tariffs unconstitutional.
While the decision has been temporarily stayed until mid-October, allowing Trump time to appeal, the outcome of the Supreme Court case could redefine presidential authority in trade — and reshape the global economic landscape.
The tariffs in question — dubbed “Liberation Day” tariffs — were imposed on April 2, 2025, and included a 10% baseline tax on nearly all imports, with up to 50% levies on countries running trade deficits with the United States.
Trump justified these measures under the 1977 International Emergency Economic Powers Act (IEEPA), declaring trade deficits and border issues a national emergency. However, the appeals court ruled that the IEEPA does not grant the president the power to impose tariffs, which constitutionally belongs to Congress.
Malaysian Reaction and Economic Implications
Malaysia, a key U.S. trading partner and a major player in global electronics and palm oil exports, has been directly affected by these tariffs. While some countries negotiated exemptions, Malaysia remained subject to the baseline levy, impacting exports of semiconductors, rubber-based products, and palm oil derivatives. The uncertainty surrounding the Supreme Court decision has led to cautious optimism in Kuala Lumpur. Bursa Malaysia saw a brief rally following the appeals court ruling, but analysts warn that the final verdict could still swing markets dramatically.
The Ministry of International Trade and Industry (MITI) has continued to advocate for Malaysia’s strategic role in global supply chains, particularly in semiconductor testing and packaging, which accounts for a significant share of global output. However, officials remain wary of premature optimism.
Malaysia and other ASEAN countries have learnt from past experience that favourable court rulings in the U.S. do not always translate into policy reversals. Trump has previously circumvented judicial decisions by invoking alternative statutes or reissuing executive orders under different legal frameworks.
ASEAN Trade Dynamics: Strategic Fragmentation and Realignment
The implications of Trump’s tariff regime extend far beyond Malaysia. Within ASEAN, the tariffs have exposed fault lines in regional solidarity. Trump’s bilateral “divide and rule” strategy — offering selective exemptions and demanding unilateral concessions — has fractured ASEAN unity and weakened collective bargaining power.
Vietnam, Indonesia, and the Philippines have already struck side deals with Washington, securing reduced tariff rates in exchange for market access and regulatory concessions. Cambodia and Thailand followed suit, leaving Malaysia in a precarious middle ground: neither fully exempt nor strategically aligned.
Prime Minister Anwar Ibrahim, who currently chairs ASEAN, has called for a unified bloc response, but intra-regional competition has made consensus elusive.
ASEAN’s consensus-driven model, while effective in many areas, has struggled to respond to coercive trade diplomacy. The bloc’s April 10 joint statement reaffirmed its commitment to open dialogue and sustainable trade relations with the U.S., but critics argue that the statement lacked enforcement mechanisms or a coordinated strategy.
Global Stakes and Strategic Concerns
Beyond Southeast Asia, the ruling has implications for dozens of economies affected by Trump’s tariff strategy. European Union officials, Japanese negotiators, and Canadian trade representatives are closely monitoring the case, as many of their deals with the U.S. were shaped under the threat of punitive tariffs. The U.S. government has collected over US$159 billion in duties since the tariffs were enacted, and a reversal could trigger complex refund claims and renegotiations.
Trump’s legal team argues that removing the tariffs would “literally destroy the United States of America,” citing national security and foreign policy concerns.
Critics, however, view the tariffs as a unilateral overreach that undermines multilateral trade frameworks and congressional oversight.
The appeals court emphasised that IEEPA does not explicitly authorize the imposition of tariffs, and that such powers remain the purview of Congress.
If the Supreme Court upholds the lower court’s decision, it could mark a watershed moment in U.S. trade governance. For Malaysia, this would mean a return to more predictable trade relations, potentially boosting investor confidence and export volumes. For ASEAN, it could offer a chance to recalibrate and restore regional cohesion — though the damage to trust may take years to repair.
Looking Ahead: Legal Uncertainty and Market Volatility
As the mid-October deadline approaches, global markets remain on edge. Malaysian exporters are hedging their bets, rerouting shipments and renegotiating contracts. The Federation of Malaysian Manufacturers (FMM) has urged the government to prepare contingency plans, including targeted subsidies and diversification strategies.
Legal scholars caution that even a favourable Supreme Court ruling may not end the tariff saga. Trump could invoke other statutes — such as Section 232 of the Trade Expansion Act — to reimpose duties under a different guise.
For Malaysia and its ASEAN neighbours, the lesson is clear: legal victories in Washington do not guarantee economic relief.
Malaysia and other ASEAN countries must temper their expectations. The history of executive manoeuvring in U.S. trade policy suggests that even judicial constraints may be sidestepped.
Strategic patience, regional coordination, and diversified trade partnerships will be key to navigating the months ahead.
The views expressed here are entirely those of Dr Mohd Safar Hasim, currently a Trustee of the Malaysian Press Institute (MPI). He was previously a senior journalist at BERNAMA and an academic at Universiti Kebangsaan Malaysia (UKM).