Markets to Face Continued Tariff Overhang Despite US Policy Shift

US tariff uncertainty will likely remain a key market overhang, even after the Supreme Court of the United Statesstruck down tariffs imposed under the IEEPA, according to Malaysian research houses.

The reason?

President Donald Trump has already reintroduced global tariffs under a different legal channel.

What Changed — And What Didn’t

After the court ruled against tariffs imposed under the International Emergency Economic Powers Act (IEEPA), Trump announced:

• 10% global tariffs

• Plan to raise them to 15% under Section 122 of the 1974 Trade Act

• Valid for 150 days, unless Congress approves an extension

Key issue:

Although legally different, protectionism remains intact.

Public Investment Bank noted Trump is unlikely to retreat, as tariffs are central to his foreign policy strategy.

Kenanga Investment Bank added:

• New tariffs are capped at 15%

• But US officials suggest tariff revenue levels will remain broadly unchanged

Meaning markets should not expect a dramatic policy reversal.

Refund Risk: US$130 Billion Question

Analysts flagged uncertainty over whether:

• Over US$130 billion in tariffs already collected will need to be refunded

Any repayment:

• Would likely face prolonged legal battles

• Could complicate fiscal projections

This adds another layer of policy unpredictability.

What It Means for Malaysia

Malaysia is unlikely to emerge as a clear regional winner, analysts say.

While the 15% cap is lower than the earlier 19% rate cited for Malaysia, an existing reciprocal arrangement (not yet ratified) could keep the 19% rate in effect.

Compared to Vietnam and Thailand:

• Malaysia’s trade surplus with the US is smaller

• Relative upside is limited

Sector Impact

Potential Beneficiaries

• Exporters, especially if tariff rates ease

• Glove manufacturers

• Select manufacturing players

Public IB top picks:

• VS Industry Bhd

• SKP Resources Bhd

• Kossan Rubber Industries Bhd

Technology Sector: Mixed Outlook

Semiconductors and E&E products are currently exempt from US tariffs, limiting direct impact.

However, Kenanga warns of:

• Order delays

• Capex postponements

• Margin pressure for EMS players

• Project timing risks for ATE firms

• Qualification delays for OSAT players if uncertainty drags on

Domestic Plays Preferred

Given trade volatility, Kenanga prefers:

• Banks and broader domestic sectors

Domestic-facing names may offer:

• More stable earnings visibility

• Less exposure to global trade disruptions

Market Takeaway

The Supreme Court ruling does not remove tariff risk — it reshapes it.

Key risks ahead:

• Ongoing legal uncertainty

• Potential refund complications

• Temporary 150-day tariff window

• Policy escalation risk

Until there is durable clarity from Washington,

tariffs remain a structural headwind for export-sensitive markets.