Supreme Court halts Trump tariffs affecting Vietnam trade

The U.S. Supreme Court has blocked a key legal tool President Donald Trump used to impose broad tariffs, creating immediate uncertainty for businesses, especially those operating in Vietnam. The administration is now shifting to a different trade law to maintain pressure on imports.

Court rules IEEPA tariffs unlawful

On February 20, 2026, the Supreme Court struck down tariffs the Trump administration had imposed under the International Emergency Economic Powers Act. The 1977 law does not grant the president authority to levy tariffs, even in response to national security threats or unfair trade practices abroad.

The decision invalidated two measures: reciprocal tariffs designed to match foreign trade barriers, and a 25% tariff on certain goods from Canada, China, and Mexico over fentanyl concerns. While the ruling did not automatically reverse all existing tariffs, it forced the administration to halt collection of those tied to the act.

U.S. Customs and Border Protection announced it will cease collecting tariffs

Administration shifts to Section 122

President Trump has introduced a new 10 per cent tariff under Section 122 of the Trade Act of 1974, with plans to raise it to 15 per cent. The move relies on Section 122, which permits a surcharge on imports for up to 150 days without congressional approval.

For Vietnamese businesses, the change creates new compliance challenges. The original tariffs had forced many to adjust supply chains, pricing, and sourcing strategies. Now, companies must adapt to a different legal structure, though it carries risks of sudden policy shifts. The 150-day limit on the surcharge means planning must happen quickly, with the possibility of further changes ahead.

Investment decisions are already being affected. Firms that reconfigured operations to avoid the earlier tariffs are now questioning whether those adjustments were long-term solutions or temporary fixes. For manufacturers with multi-year projects, the lack of clarity makes it difficult to commit capital. Yet hesitation can mean losing ground to competitors who move faster.

Diplomatic efforts continue

High-level talks between the U.S. and Vietnam remain active. Both sides are working to manage the fallout from the court’s decision while preserving market access. Vietnamese officials have stressed the need for stable trade rules, and U.S. representatives have indicated a willingness to operate within the new legal boundaries.

Businesses are now focused on two priorities. First, they must determine how the surcharge applies to their products. Second, they need to assess whether existing supply chain changes will remain effective under the new system. Customs exposure, product classification, and origin requirements have become critical, particularly for electronics, textiles, and agricultural goods—sectors where Vietnam plays a key role in U.S. supply chains.

The administration’s order ending the earlier tariffs kept the suspension of duty-free treatment for low-value imports. That change, along with the new surcharge, may push some e-commerce sellers to reconsider logistics strategies, including warehousing and fulfillment networks.

The Supreme Court’s decision limits the president’s ability to impose sweeping tariffs indefinitely. However, it does not remove the risk of trade disruptions. The surcharge may be temporary, but its effects will influence how Vietnamese exports develop in the coming years.

Companies must also consider how corporate oversight rules interact with these trade changes, as compliance requirements evolve alongside shifting policies.