US tariff ruling to have limited impact on Trump-Takaichi meeting

TOKYO – The US Supreme Court’s decision rejecting President Donald Trump’s use of emergency powers to impose global tariffs is a major setback for his economic policy, but the legal defeat is likely to have a limited impact on his meeting with Japanese Prime Minister Sanae Takaichi in March.

The top court’s ruling on Feb 20 came three days after Mr Trump announced Japan’s first set of investment projects in the United States, worth about US$36 billion (S$45.6 billion), and asserted they would never have taken place without tariffs.

The projects, including building a massive natural gas facility to power artificial intelligence data centres, are part of a US$550 billion package that Japan committed to in return for the Trump administration lowering tariffs on Japanese imports.

Given that the court ruled Mr Trump’s invocation of the 1977 International Emergency Economic Powers Act to implement the sweeping tariffs without congressional approval was unconstitutional, Ms Takaichi is expected to face pressure at home over the heavy investment of taxpayers’ money in the United States.

Japanese companies that have shown interest in taking part in such government-led initiatives could harbour second thoughts as well.

Despite the nascent uncertainty about the outlook for economic ties between Japan and the United States, government officials and experts seem confident that the illegality of the so-called reciprocal tariffs would not divert the future path of the two allies, at least in the short term.

“I don’t foresee the Supreme Court ruling throwing a wrench in the preparations of the Takaichi visit or the implementation of the investment projects just recently announced,” said Ms Mireya Solis, director of the Center for Asia Policy Studies at the Brookings Institution.

Mr Trump’s additional auto tariffs, imposed in 2025 under a different legal mechanism, matter most to Japan, “so the threat of moving back to 25 per cent is all too real”, she said.

Following months of negotiations, Japan and the United States struck a trade deal in July 2025, under which the tariff rate was reduced to 15 per cent in exchange for Japan purchasing more American products, in addition to committing to the investment package.

Regarding the country-specific tariff framework, Mr Trump initially threatened to impose an additional 25 per cent duty on most Japanese imports, but the rate was ultimately also lowered to 15 per cent.

After the legal loss, Mr Trump signed an order imposing a new 10 per cent “global tariff” to replace the scheme, targeting imported goods from all countries, with a senior White House official confirming Japan’s 15 per cent would be lowered to that rate.

For the new tariff, Mr Trump invoked Section 122 of the Trade Act of 1974, which permits the president to impose tariffs of up to 15 per cent for up to 150 days to address serious balance-of-payments problems.

Mr Stan Veuger, a senior fellow in economic policy studies at the American Enterprise Institute, said the Supreme Court’s ruling was a “deep humiliation for the administration”, making any future tariffs less credible.

While noting there are alternative statutes that can secure similar amounts of tax revenue, with Section 122 an effective option for replicating the structure of the 1977 emergency law, Mr Veuger added, however, that the administration will find it more difficult to impose “durable” tariffs.

As Japanese and US officials intensify preparations for Ms Takaichi’s meeting with Mr Trump at the White House on March 19, their past remarks have indicated that they intend to put the US$550 billion investment package, focused on strategic industrial sectors, at the centre of the summit.

They believe the package could serve as a catalyst to boost bilateral cooperation in areas such as critical minerals, semiconductors and AI, advancing their national security interests and economic objectives.

Ms Takaichi’s first trip to the United States since becoming Japanese prime minister in October will take place weeks before Mr Trump’s visit to China, which has been engaged in fierce competition with the two countries in those sectors.

Considering that the primary purpose of Ms Takaichi’s visit to Washington is to cement her relationship with Mr Trump, Ms Solis, a Japan expert at the Washington think-tank, said: “The extant trade agreement and the roll-out of the first batch of investment projects will be a stepping stone for that endeavour.” KYODO NEWS