Thailand braces for uncertainty of Trump's tariff roulette after court ruling

The situation emerging from the US Supreme Court striking down Donald Trump’s arbitrary tariffs on imports as unconstitutional raises more uncertainty for global trade and new challenges for the next Thai government.

Trump had rattled all trading partners by announcing sweeping tariffs in April 2025. Business professionals and policymakers worldwide have been closely monitoring the sequence of actions, legal challenges and the responses of major economies.

In a landmark decision on Friday (February 20), the US Supreme Court struck down most of Trump’s tariffs, declaring them unconstitutional. The ruling cited insufficient legal grounds and improper use of executive power, violating the International Emergency Economic Powers Act. This move temporarily eased tensions but left ambiguity regarding future trade policy.

An upset White House immediately doubled down on its policy. A defiant Trump imposed a fresh round of 15 per cent tariffs for 150 days, up from the previous 10 per cent, warning trade partners of further measures if negotiations stalled. His administration signaled potential use of sections 301 and 232 of the Trade Act, targeting products deemed critical to national security or unfairly subsidized abroad. This escalation reignited uncertainty for exporters and importers.

The ‘Liberation Day’ Trump plan

On April 2, 2025—dubbed ‘Liberation Day’—Trump had unveiled a comprehensive tariff plan targeting imports from key trading partners.

Suddenly, the average effective US tariff rate of around 2.5–2.7 per cent in 2024 shot up to a projected average effective tariff rate of 17.7–22.5 per cent. This was the highest level since the Smoot-Hawley tariffs of the 1930s, according to the Budget Lab at Yale University and other research groups.

The Trump administration said its intent was to protect US industries, reduce trade imbalance and force renegotiation of trade agreements. The announcement triggered immediate concern among exporters and led to a flurry of diplomatic activity.

The US launched talks with China, the European Union, Canada, Mexico, Japan and South Korea. Negotiations were tense, with each partner seeking exemptions and adjusted terms. China and the EU responded with countermeasures, while Canada and Mexico pushed for clarity regarding North American trade rules. Japan and South Korea emphasized the importance of stability in supply chains, urging the US to reconsider broad tariffs.

Legal challenges

Importers filed lawsuits over the new tariffs, claiming they were arbitrary and damaging to consumer interests. US consumers have faced rising prices for everyday goods, fueling public debate and prompting calls for a legislative review. Several states joined the legal challenge, arguing that the tariffs threatened economic growth and violated established trade laws.

Thailand was subjected to a 36 per cent US tariff on Liberation Day. Trump later reduced the rates for Thailand and Cambodia to 19 per cent as a reward for a ceasefire agreement he claimed to have brokered. After court challenges and renegotiations, the US average effective tariff rate fell to around 9.1–13.7 per cent by February 2026, before the Supreme Court ruling pulled the carpet from under the Trump administration.

The situation for Thailand

Thailand, with its sizable trade surplus, faces new challenges as US tariffs target key export sectors. The government had worked for months to negotiate exemptions and maintain competitive tariff rates. At the same time, Thai officials emphasized the importance of ongoing trade talks, particularly in light of the uncertain status of US-Thailand trade agreements.

In recent rounds of negotiations, Thailand had made several trade concessions, a source revealed.

In November 2025, the Thai Cabinet approved a plan to increase the import quota of US feed corn to 1 million metric tons—a substantial jump from the previous 54,700-ton limit—with tariffs reduced to zero.

Despite President Trump’s recent decision to impose a baseline 15 per cent tariff on all countries, Thailand may still face higher rates in the future.

“The new 15 per cent tariff rate is slightly better than the previous one, and it may limit the US administration’s room to raise tariffs further,” says Viroj NaRanong, research director for health economics and agriculture at the Thailand Development Research Institute.

On the Thai side, however, Viroj is unsure whether the new government will act decisively and take a broader, long-term view instead of focusing mainly on pleasing local farmers. The government may be hesitant to open the market to US agricultural products such as feed maize, even though domestic production is insufficient, he notes.

A restricted opening of the agricultural market would have knock-on effects on the animal feed and livestock industries.

There is frequent talk about shifting from exporting basic farm products to higher value-added goods, but to increase exports of value-added products, the country needs access to cheaper raw materials, Viroj points out.

He cites tapioca as an example. In recent years, downstream products—primarily modified starch—have generated more than twice the export value of all upstream and midstream tapioca products combined. When the border with Cambodia was closed, imports of fresh tapioca root fell, pushing up domestic fresh-root prices. The government hailed this as a successful policy for boosting upstream tapioca prices, but according to Viroj, this shows that policymakers are not considering the broader interests and long-term development of the entire industry.

Meanwhile, Thai business leaders expressed cautious optimism about Trump’s new tariff and export prospects, noting that demand for Thai products remains strong.

However, obstacles persist, including tariff volatility, shifting US regulations and the pressure to adapt export strategies.

Options before the White House

According to the Office of Commercial Affairs at the Royal Thai Embassy in Washington, the Trump administration still has several legal tools it can use to impose tariffs.

Among the immediate options is Section 122 of the Trade Act of 1974, which can be invoked in balance-of-payments emergencies or to protect the US dollar if it becomes significantly weak. Under this provision, the president may immediately impose tariffs of up to 15 per cent and apply them for as long as 150 days, with the possibility of extending the measure beyond that period if Congress approves.

Another key tool is Section 338 of the Tariff Act of 1930, which allows the president to respond to countries that discriminate against US trade. Using this authority, the president can raise tariffs on goods from countries that adopt discriminatory trade practices against the United States, increase tariff rates by up to 50 per cent, and maintain these higher tariffs without any fixed time limit.

Section 232 of the Trade Expansion Act of 1962 allows restrictions on imports of goods that threaten national security. The US Department of Commerce can open an investigation, which may last up to 270 days, and can recommend tariffs on specific products or industries without any limit on tariff rates or duration.

Section 301 of the Trade Act of 1974 authorizes the US Trade Representative (USTR) to retaliate against trading partners found to have adopted actions, policies or trade practices that are unreasonable or discriminatory and that burden or restrict US trade. The USTR may impose tariff increases on an individual country or a group of countries without any ceiling on the tariff rate. These tariffs automatically terminate after four years unless the USTR, upon request, decides to maintain them.

Section 201 of the Trade Act of 1974 provides safeguard measures to protect domestic industries that are seriously damaged or threatened by a sudden surge in imports. The US International Trade Commission may conduct an investigation, which can last up to 180 days, and may recommend imposing tariffs of up to 50 per cent on specified products. After one year of application, the tariff rate is to be gradually reduced. The initial duration of the safeguard measure is four years and may be extended, but the total period cannot exceed eight years.