DBS Group Research economists Radhika Rao and Chua Han Teng note that the US court ruling invalidates unilateral IEEPA tariffs on ASEAN-6, shifting them to MFN plus a 15% Section 122 levy until July 2026. Malaysia, Thailand, Vietnam and Indonesia see lower effective rates, while Singapore’s rises slightly but remains lowest. The bank keeps its regional economic projections unchanged.

IEEPA reversal and Section 122 impact

"Firstly, unilateral tariffs imposed by the US on the region under the IEEPA are likely to be deemed invalid."

"These countries will now face their respective MFN rates plus a global 15% tariff under Section 122, which will be in effect until July 2026, but could face legal hurdles in the interim, resulting in continued trade policy uncertainty."

"The blanket 15% rate will benefit Malaysia, Thailand, Vietnam, and Indonesia by reducing their effective rates by ~1.7 to 3.2 percentage points (pp) but raise the rate on Singapore by ~1.1pp, according to Global Trade Alert."

"Despite this, the effective tariff rate on Singapore will be the lowest in the ASEAN-6 bloc."

"Sector-specific tariffs under Section 232 will remain in place, while exemptions covering semiconductors, non-branded pharma etc. will continue to apply."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)