- Executive Summary
On February 20, 2026, the United States Supreme Court issued a landmark 6-3 ruling in Learning Resources, Inc. v. Trump, holding that the International Emergency Economic Powers Act (IEEPA) of 1977 does not confer upon the President the authority to impose tariffs. Chief Justice John Roberts, writing for the majority, reasoned that tariff imposition constitutes a core congressional power — the power of the purse — and that Congress had not delegated such authority through IEEPA’s ambiguous language. The ruling vacated tariffs that had collectively generated an estimated USD 142 billion in revenue over the course of 2025.
The Trump administration responded by invoking Section 122 of the Trade Act of 1974, initially imposing a 10 per cent global surcharge before raising it to the statutory maximum of 15 per cent on February 21. This surcharge, effective February 24, applies for 150 days and is global in scope, though it carries specific exemptions.
For Singapore, a small open economy deeply integrated into global supply chains and highly dependent on trade with the United States, the ruling and its aftermath present a complex and rapidly evolving challenge. Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong acknowledged on February 22 that the 15 per cent across-the-board tariff would “in all likelihood” apply to Singapore, characterising the environment as “very unpredictable and uncertain.” - Background and Legal Framework
2.1 The International Emergency Economic Powers Act (1977)
Enacted in 1977 as a successor to the Trading with the Enemy Act, IEEPA grants the President broad authority to regulate economic transactions in response to an “unusual and extraordinary threat” to national security, foreign policy, or the economy. No President prior to Donald Trump had invoked IEEPA to impose tariffs. The Trump administration relied on IEEPA beginning in February 2025 to impose tariffs on China, Canada, and Mexico, citing drug-trafficking concerns and trade deficits, and subsequently extended the authority globally through “Liberation Day” reciprocal tariffs in April 2025.
2.2 The Tariff Regime (2025–2026)
By January 2026, IEEPA-based tariffs accounted for more than 51 per cent of all US tariff revenue, generating approximately USD 500 million per day. The Yale Budget Lab estimated that the combined IEEPA tariff regime represented a pre-substitution effective tariff rate of 16.9 per cent — the highest since the early twentieth century. These levies encompassed a minimum 10 per cent baseline for all trading partners and significantly higher “reciprocal” rates on countries with bilateral trade surpluses vis-à-vis the United States.
2.3 The Case: Learning Resources, Inc. v. Trump
The constitutional challenge was brought by several small businesses adversely affected by the tariffs. Oral arguments were heard before the Supreme Court on November 5, 2025. The majority opinion, authored by Chief Justice Roberts and joined in full by Justices Gorsuch and Barrett, applied the “major questions” doctrine: because the imposition of tariffs touches upon a core congressional power and involves highly consequential economic policy, the Court held that IEEPA’s delegation language did not — and could not — confer such authority on the executive branch without explicit congressional authorization. Justices Thomas, Alito, and Kavanaugh dissented. - The Ruling and Its Immediate Aftermath
3.1 Core Holding
The Court’s holding was unambiguous: “IEEPA does not authorize the President to impose tariffs.” The executive order vacating the IEEPA tariffs was issued simultaneously, with the directive that such tariffs “shall no longer be in effect and, as soon as practicable, shall no longer be collected.” The order preserved other tariff regimes — notably Section 232 tariffs on steel, aluminium, and automobiles, and Section 301 tariffs on Chinese goods — which were enacted under separate statutory authorities and were not at issue in the litigation.
3.2 The Refund Question
The Supreme Court’s opinion was silent on the question of refunds for the estimated USD 142–175 billion collected under IEEPA over the course of 2025. The administration indicated it would not proactively issue refunds; instead, importers must pursue claims through the US Court of International Trade or through administrative protest procedures with US Customs and Border Protection within 180 days of liquidation. The Penn Wharton Budget Model projected that potential refunds could reach USD 175 billion — a fiscal event comparable in magnitude to the entire tax-cut stimulus of 2026.
3.3 Executive Response: Section 122 Tariffs
Within hours of the ruling, President Trump announced a 10 per cent global import surcharge under Section 122 of the Trade Act of 1974, subsequently raised to the statutory ceiling of 15 per cent. Section 122 permits the President to impose temporary tariffs of up to 15 per cent for a maximum of 150 days to address serious balance-of-payments deficits. The surcharge carries exemptions for: USMCA-qualifying goods from Canada and Mexico; goods subject to Section 232 tariffs; energy and energy products; pharmaceuticals and pharmaceutical ingredients; certain electronics and semiconductors; certain aerospace products; and critical minerals. - Macroeconomic Implications
Dimension IEEPA Upheld (Counterfactual) Post-Ruling (SCOTUS + Section 122)
Pre-substitution effective tariff rate 16.9% 6.7%
Post-substitution effective tariff rate 14.3% ~5–6%
US consumer price impact (short run) +1.3–1.7% (~USD 1,600/household) +0.6% (~USD 700/household)
IEEPA tariff revenue (2025 collected) USD 142–165 billion ~USD 0 (vacated)
Projected total tariff revenue 2026–35 >USD 2.4 trillion (dynamic) ~USD 1 trillion (dynamic)
US manufacturing output change +1.2% +0.8% (estimated)
Potential refund liability N/A USD 100–175 billion
Source: Yale Budget Lab, Penn Wharton Budget Model, February 2026.
Treasury Secretary Scott Bessent stated that the administration’s use of alternative tariff authorities would “result in virtually unchanged tariff revenue in 2026.” However, independent economists noted that the structural shift was significant: China’s effective tariff rate was cut by nearly two-thirds following IEEPA invalidation, from approximately 36 per cent to 21 per cent, before the Section 122 surcharge partially restored it to 35 per cent. Meanwhile, US GDP growth in Q4 2025 was already decelerating — recorded at 1.4 per cent annualised — in part attributable to a government shutdown, with analysts projecting a rebound contingent on tariff relief feeding through to consumer spending.
- Impact on Singapore
5.1 Singapore’s Trade Exposure to the United States
Singapore is one of the most trade-dependent economies in the world, with merchandise and services trade together exceeding 300 per cent of GDP. The United States is among Singapore’s largest trading partners, with bilateral trade in goods and services running into tens of billions of dollars annually. Singapore’s key export sectors — semiconductors and electronics, pharmaceuticals and biomedical products, refined petroleum products, precision engineering, and chemicals — represent sophisticated, high-value-added industries that are deeply embedded in US supply chains.
Under the 2003 United States-Singapore Free Trade Agreement (USSFTA), bilateral tariffs on most goods were eliminated. However, the USSFTA does not contain explicit safeguards against emergency tariff measures invoked under domestic US law, a gap that the IEEPA episode exposed with particular sharpness.
5.2 Exposure Under the IEEPA Tariff Regime (2025)
During the period April–February 2025/26, Singapore’s exports to the United States faced IEEPA-based reciprocal tariffs alongside its Asian peers. Although the precise tariff rate applied to Singapore under the reciprocal schedule was subject to negotiation, the global baseline of 10 per cent applied by default. The sudden imposition of these levies disrupted the planning assumptions of Singapore-based exporters, particularly in electronics and pharmaceuticals.
5.3 Post-Ruling Environment: The Section 122 Tariff
Following the Supreme Court ruling, DPM Gan Kim Yong stated on February 22 that Singapore would “in all likelihood” be subject to the new 15 per cent Section 122 global surcharge, noting the difficulty of negotiating country-specific exemptions when tariffs are applied on a universal, across-the-board basis. This represents a significant analytical point: whereas discriminatory tariffs theoretically provide room for bilateral negotiation, a blanket global levy structurally forecloses preferential treatment.
5.3.1 Sectors of Concern
Semiconductors and Electronics: Singapore is a major global hub for semiconductor manufacturing and testing. The Section 122 tariff carves out certain electronics and semiconductors that “may be the subject of Section 232 tariffs” not yet imposed, creating a zone of uncertainty. The Singapore Ministry of Trade and Industry (MTI) confirmed that the government was in active discussions with US counterparts on this front, though the substance of negotiations remained confidential.
Pharmaceuticals and Biomedical Products: Singapore’s pharmaceutical sector — home to major multinational plants from GSK, Pfizer, MSD, and others — faces prospective Section 232 tariffs that have been signalled but not yet enacted. DPM Gan noted in a separate media briefing that most pharmaceutical companies in Singapore had either built capacity in the United States or were in the process of doing so, which may provide pathways to Section 232 exemptions. Meanwhile, the Section 122 carve-out for pharmaceuticals offers near-term relief.
Refined Petroleum and Chemicals: These commodity-intensive sectors are exposed to the 15 per cent surcharge and may face margin compression, particularly in the context of an already-slowing global demand environment.
5.4 Government Response and Policy Measures
The Singapore government’s response has been calibrated, pragmatic, and consistent with the city-state’s historical approach to external economic shocks.
Singapore Economic Resilience Taskforce (SERT): Launched in April 2025 and chaired by DPM Gan, SERT functions as the primary coordinating body for policy responses to US tariff measures. Following the ruling, SERT was directed to provide timely information to businesses and workers and gather feedback on the economic impact.
Budget 2026 Measures: Parliament was scheduled to debate Budget 2026 from February 24, which incorporates a Corporate Income Tax rebate and enhanced support for companies seeking to expand into new markets and move into higher value-added activities. DPM Gan indicated that existing budget measures were “sufficient for local businesses to weather the immediate impact,” while explicitly reserving the option to roll out additional support.
Trade Diplomacy: MTI confirmed active engagement with US counterparts to seek clarity on Section 122 implementation, the scope of exemptions, and the process for potential IEEPA tariff refunds — an area of financial significance given Singapore-based importers’ potential eligibility for refund claims.
Competitive Positioning: DPM Gan offered a notable structural argument: if the 15 per cent tariff is truly applied on a universal, non-discriminatory basis, Singapore’s relative competitiveness vis-à-vis other Asian exporters is not degraded. The challenge, rather, is the absolute increase in cost and the attendant drag on global trade flows and investment.
Singapore is maintaining its 2026 GDP growth forecast at 2–4 per cent, reflecting cautious optimism that the policy uncertainty — while disruptive — is manageable within existing fiscal frameworks.
- Comparative Country Responses
Country/Region Initial Tariff Exposure Post-Ruling Response
China ~36% IEEPA; now ~35% (Section 122 + Section 301 + 232 remaining) Urges US to cancel unilateral tariffs; conducting ‘comprehensive assessment’; monitoring US Section 232 moves
European Union 15% IEEPA (trade deal); now subject to 15% Section 122 Seeking clarity; ECB warns of uncertainty; EU retains retaliatory toolkit
India 18% IEEPA (interim trade deal); Section 122 status unclear Trade delegation to Washington postponed pending legal clarification
Taiwan Initial assessment of 10% flat rate: ‘limited impact’ Closely monitoring; maintaining communication with US administration
Canada/Mexico IEEPA tariffs partially suspended under USMCA negotiations; exempt from Section 122 for USMCA-qualifying goods Cautious welcome; reassessing legal and commercial position
Singapore 10% IEEPA baseline; now likely 15% Section 122 (pharma/semiconductors potentially exempt) Active engagement with US; SERT mobilised; Budget 2026 measures invoked - Legal and Constitutional Significance
The ruling in Learning Resources, Inc. v. Trump is jurisprudentially significant on at least three dimensions.
First, it represents a major application of the “major questions” doctrine — the interpretive principle articulated in West Virginia v. EPA (2022) holding that courts should not read ambiguous statutory language as conferring upon the executive branch authority over matters of vast economic and political significance. Chief Justice Roberts applied this doctrine with particular force given that tariffs are constitutionally assigned to Congress under Article I, Section 8 of the Constitution.
Second, the ruling constrains the President’s emergency economic powers in peacetime to measures that fall short of outright taxation of imports. The majority distinguished permissible regulatory measures (such as asset freezes and transaction restrictions) from the distinct power of tariff imposition, which it characterised as a branch of the taxing power.
Third, the decision has immediate implications for the global trading order: several bilateral trade agreements concluded between the Trump administration and other countries — including India’s interim deal and the EU framework — were premised on IEEPA-based tariff structures, raising questions about their ongoing legal basis. US Trade Representative Jamieson Greer affirmed on February 22 that existing trade deals remain in force, but the legal foundations of those tariff commitments must now be reconstructed under alternative authorities. - Prospective Scenarios and Implications for Singapore
Scenario A: Section 122 Expires Without Replacement (Low Probability)
If Congress declines to extend Section 122 tariffs after 150 days and the administration fails to enact Section 232 or Section 301 tariffs to replace them, Singapore would revert to a substantially tariff-free bilateral trading relationship under the USSFTA. This scenario is considered unlikely given the administration’s stated commitment to maintaining tariff revenues and protectionist industrial policy objectives.
Scenario B: Section 232 Tariffs Imposed on Key Singapore Export Sectors
The administration has signalled the intention to impose Section 232 tariffs on semiconductors and pharmaceuticals. For Singapore — a critical node in global semiconductor supply chains — this scenario carries significant medium-term risk. The key mitigation pathway is for Singapore-based manufacturers to qualify for exclusions by demonstrating US investment or supply chain integration, a strategy DPM Gan has publicly encouraged.
Scenario C: Sustained 15% Global Surcharge (Most Likely Near-Term Scenario)
For the immediate 150-day period through July 24, 2026, a 15 per cent uniform surcharge is most likely to prevail, subject to specific exemptions. This is a material but manageable headwind for Singapore given its manufacturing diversification, the partial exemption of key sectors, and the government’s counter-cyclical fiscal capacity. The primary risks are indirect: a slowdown in global demand, reduced foreign direct investment into Singapore as companies reassess supply chain configurations, and a protracted environment of regulatory unpredictability. - Conclusions
The Supreme Court’s ruling in Learning Resources, Inc. v. Trump represents a fundamental rebalancing of the constitutional architecture of US trade policy — restoring primary tariff authority to Congress and constraining executive unilateralism in this domain. For the global trading system, the ruling provides legal clarity at the cost of policy continuity, as the administration’s rapid pivot to Section 122 demonstrates that significant tariff levels will persist through alternative legal channels.
For Singapore, the episode underscores three enduring structural realities. First, as a price-taking open economy, Singapore remains acutely vulnerable to unilateral policy shifts by major trading partners regardless of bilateral treaty protections. Second, Singapore’s competitive advantage lies in high-value, knowledge-intensive industries — precisely the sectors that the US is most likely to scrutinise under Section 232 national security reviews. Third, the city-state’s institutional capacity for rapid, adaptive policy response — as evidenced by SERT, Budget 2026 measures, and active trade diplomacy — provides meaningful resilience against external shocks.
The post-ruling environment is, in DPM Gan’s words, “a stark reminder” of the new economic world Singapore must navigate: one defined by strategic competition, fragmented multilateral institutions, and a United States executive branch that, even when judicially constrained, retains significant tariff-making authority through alternative legal pathways.