BGA Managing Director for Global Trade and Economics Nydia Ngiow wrote an update to clients on changes in the global trade landscape following challenges to U.S. President Trumps’s authority to impose tariffs under the International Emergency Economic Power Act.

Countries and companies have been scrambling since April 2, when U.S. President Donald Trump followed up on his campaign promises to leverage the International Emergency Economic Power Act (IEEPA) to impose “reciprocal” tariffs on nearly all U.S. trading partners. However, the use of the IEEPA was controversial, introducing an unprecedented layer of uncertainty because it appeared to be applied arbitrarily without any prior investigations. This included countries with which the United States enjoyed a trade surplus; free trade partners, which already required two-way tariff-free entry for imports; and close allies, including the European Union and Japan. Washington’s use of the IEEPA was unsurprisingly challenged, with the legality of this approach unresolved. The Supreme Court‘s decision, expected before mid-2026, could cause ripple effects that would potentially upend ongoing U.S. trade and investment arrangements worldwide.

The United States has used these tariffs — starting from 10 percent for free trade partners like Singapore, with which it has a trade surplus, to 50 percent for India (including a 25 percent penalty for the import of Russian crude oil) — to convince countries to sign trade deals and companies to move factories back to the United States. The Office of the U.S. Trade Representative (USTR) has also used the tariffs to force countries to remove non-tariff barriers that impacted U.S. company operations in these markets.

Trump’s October trip to Asia did not provide additional clarity. He signed agreements with Malaysia, Cambodia and Korea, announced frameworks with Thailand and Vietnam and signed various memorandums of understanding touching on critical minerals. The agreements with Malaysia and Cambodia were surprisingly comprehensive, touching not just on trade in goods but also on services and intellectual property. These included references to digital trade reminiscent of the U.S. position before its reversal and withdrawal of support for its own positions in 2023. The agreements will likely serve as models for forthcoming agreements with the rest of the Association of Southeast Asian Nations member states.

Given the ongoing legal discussions, countries are worried about what it would mean for the agreements they have signed or are currently negotiating if the Supreme Court rules Trump’s use of the IEEPA unlawful. They wonder whether these agreements will remain in force and whether they would still be required to follow through on their investment promises. For countries that have yet to sign agreements, negotiating postures have been adjusted to take this uncertainty into consideration. For instance, Indonesia, which is slated to resume discussions with the United States in mid-November, has been more vocal, noting that the negotiations so far have been imbalanced. After having seen the text of Malaysia’s agreement and the ensuing backlash, Indonesia says it needs a deal that is grounded in fairness and reciprocity. Malaysia, meanwhile, faces domestic and international scrutiny over its agreement with the United States, both externally to the public and internally to its own members of Parliament, as it struggles to justify both the process and the optics.

Until the U.S. courts provide clarity, countries and companies will need to navigate a trade landscape that is defined more by unpredictability than policy as rules and consequences remain unclear.

If you have any questions, please reach out to BGA Managing Director for Global Trade and Economics Nydia Ngiow, Head of Research Murray Hiebert, Senior Adviser Larry Greenwood or Senior Adviser James Carouso.

Best Regards,

BGA Global Trade and Economics Team

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Managing Director, Global Trade and Economics

Nydia brings over a decade of experience working at the forefront of international affairs and international trade issues in the Asia-Pacific, with the majority of her career prior to BGA spent working for the Singapore government. Nydia most recently managed the China Program at the American National Standards Institute (ANSI) in Washington, D.C., where she brought together technical, business and policy leaders to find solutions to issues affecting U.S.-China trading relations to strengthen U.S. market access in China. She provided member organizations with coverage of policy and reform issues, and furthered ANSI’s relationships with counterpart organizations in China. Positioned in ... Read More