Why Asian Firms Are Not Cheering Trump Tariff Ruling
China is often referred to as the factory of the world, and when the US Supreme Court recently struck down a crucial component of President Donald Trump’s extensive tariff regime, businesses across Asia did not react with celebration. Instead, exporters, manufacturers, and logistics companies are left to navigate further confusion about their access to the world’s largest consumer market.
– No one likes uncertainty, said Push Sharma, founder of Singapore-based wellness brand Haldy, which had spent years preparing to venture into the American market before putting those plans on hold last year. We had already done the trademark registrations and groundwork. Everything felt drastic. We had to defer our plans.
– Trump’s tariffs aimed to reduce global reliance on Chinese manufacturing. However, exporters caution that shifting US trade policies could inadvertently strengthen Beijing’s manufacturing dominance rather than diminish it.
New Year, Same Problems
On Friday, the US Supreme Court ruled that the emergency powers law used by Trump to impose tariffs did not authorize his policy framework, effectively invalidating billions of dollars in levies. Within hours, Trump signed an executive order to impose a new 10% global tariff, utilizing legislation that allows the president to implement import taxes for 150 days without congressional approval. He subsequently threatened to increase this rate to 15%.
– On Tuesday, as tariffs went into effect, official documents confirmed the rate remained at 10%, as no additional directive was issued to raise it. Those anticipating insights into Trump’s tariff strategy during his State of the Union address were left disappointed. The president reiterated his criticisms of the ruling, stating tariffs “will remain in place under fully approved and tested alternative legal statuses,” but failed to provide specifics.
– US Trade Representative Jamieson Greer stated the president might raise tariffs to 15% “where appropriate,” but did not specify which countries would be affected. The ruling only adds to the uncertainty right now, said Monica Gorman, a former White House trade official, labeling the new tariffs a stop-gap measure while Washington prepares fresh strategies.
– Dan Ives from Wedbush Securities remarked that firms embedded in Asian production networks now face crucial investment decisions without clear guidance from Washington. Should we move supply chains from one country to another without knowing the rules of the game? Welcome to navigating tariffs in 2026.
Ongoing Challenges for Manufacturers
The previous year proved equally challenging, with manufacturers experiencing rising costs since Trump’s initial tariff announcements in April.
– It was a big slap in the face when the tariffs were announced, lamented Tomi Mäkelä, general manager of Thailand’s Lanna Clothing, a garment exporter. Clients often renegotiated or canceled orders amid the uncertainty. “I can’t absorb these costs forever; I need to raise prices.”
– Pricing challenges persist for Sharma’s Haldy brand. If you don’t know what your final costs will be, he explained, “the cost of doing business becomes daunting since you can’t accurately price your products.
– Lynsey Lim, founder of Singapore skincare brand Handmade Heroes, pointed out that tariffs are pushing companies to focus less on pricing and more on increasing efficiency and diversifying their markets beyond the United States. Early feedback indicates that uncertainty—rather than the headline tariff rate—significantly drags on business confidence, commented Kok Ping Soon, CEO of the Singapore Business Federation. “Businesses can plan for a known cost increase, but they hesitate when the target keeps moving, often delaying significant investments and routing decisions.
Strategic Shifts Amidst Uncertainty
In response, some companies are rethinking their strategies altogether. Haldy is expanding its retail presence in Malaysia and exploring opportunities in the Middle East.
– I’ve made a deliberate choice to focus on factors within my control, Sharma stated. Similarly, Mäkelä of Lanna Clothing is enhancing business operations in Canada while targeting Australia and Europe for new customers.
Logistics giant DHL noted that businesses are now required to navigate a more complex operating environment. Although the Supreme Court ruling suspended some tariffs, many operational questions remain unanswered.
– It is too early to evaluate how potential refunds may be processed, explained Niki Frank, CEO of DHL Global Forwarding Asia-Pacific. “We’re closely monitoring legal developments to ensure customers can exercise their rights.”
Supply chains typically adjust slowly, Frank noted, as these decisions require years of careful planning. Tariffs are just one factor companies need to consider.
Separately, rival delivery firm FedEx has filed a lawsuit seeking a full refund of Trump’s emergency tariffs, asserting its rights as an importer of record.
Concerns About China’s Manufacturing Dominance
Despite shifts in US trade policy, China remains an integral manufacturing hub in Asia. Tariffs associated with country of origin rules still apply, making it challenging for businesses to bypass Chinese supply chains.
– It’s tough to exclude China from the equation, Sharma remarked, whose Haldy products are manufactured in China. If it’s made in China, there’s a 25% tariff. Additionally, Chinese manufacturers are raising prices for regional clients, such as Sharma, in response to reduced demand, resulting in some factories operating below capacity.
Many Southeast Asian exporters find themselves in a bind—they could benefit by diversifying away from China, but if Beijing enjoys lower tariffs, it may weaken their global competitiveness. I’m more worried about China, said Mäkelä. They can produce at a massive scale, and their production costs will remain lower than ours in Thailand.
Moreover, companies say they will always depend on China for specific components, such as packaging.
The Road Ahead
Trump’s anticipated visit to China at the end of March, along with the potential for new agreements, could introduce further fluctuations in tariff policy. The recent ruling has also complicated relationships between Washington and its Asian trading partners. While some exporters may benefit from a reduced global tariff rate, they are unlikely to celebrate the US tariff reset too quickly, cautioned Reema Bhattacharya, head of Asia research at Verisk Maplecroft. “The immediate burden has eased, but the legal shift raises risks of more targeted trade measures, moving uncertainty from a broad scale to sector-specific vulnerabilities.”
As tariffs increase prices for American consumers and dampen discretionary spending, the ramifications ripple back to Asia. Companies often make production and inventory decisions months in advance, complicating matters when tariff regulations shift.
– It doesn’t feel good, Mäkelä said. You don’t know what’s going to happen or where we’re headed.
Although the US market remains crucial for Asian exporters, after a year filled with fluctuating tariffs, many companies are no longer waiting for clarity from Washington. They are adjusting their supply chains and venturing into new markets to adapt to the new normal.
For governments, businesses, and financial markets, one thing is certain: more uncertainty lies ahead.