From IEEPA to Section 122: What a tariff reset means for Asia in World Economy News 25/02/2026 The Supreme Court’s decision to strike down the reciprocal IEEPA tariffs could materially reshape the trade policy landscape. In response, US President Donald Trump swiftly announced the introduction of a 15% across‑the‑board tariff under Section 122, following an initial 10% surcharge that was raised to 15% on 22 February. Under the new structure, the Section 122 tariff applies broadly to all imports, with several key exceptions. Products already subject to Section 232 duties – such as steel, aluminium, copper, lumber, and automobiles – are excluded to the extent that existing 232 tariffs remain in force. Approximately 1,100 product codes are fully exempt from the surcharge. For Asia, the net effect is tariff relief Switching from the old IEEPA system to a flat 15% Section 122 tariff clearly creates winners and losers among the top US import partners. The biggest winners are countries that were previously hit with high IEEPA rates. They now see those heavy surcharges replaced by a much lower, uniform tariff. From a regional perspective, the removal of IEEPA tariffs represents a clear positive for Asia. China and India benefit the most, with tariff cuts of 7.1 points and 5.6 points, respectively. In their case, the new 15% rate is far better than the steep, country‑specific IEEPA tariffs they had been facing previously. Sectoral implications: Strongest gains in low value added goods Industries that were most heavily impacted by IEEPA measures show the sharpest decline in tariff incidence. These sectors, where Asia holds a strong global market share, include: Apparel Toys, games and sports Furniture, lighting Electrical machinery Aircraft For these categories, the gap between earlier IEEPA tariffs and the new 15% surcharge is particularly large, resulting in a meaningful improvement in export competitiveness for key Asian producers. China benefits from restoring some price competiitveness China stands to gain meaningfully from the removal of IEEPA tariffs, as this materially reduces its tradeweighted tariff burden compared with the previous regime. While tariff pressure does not disappear entirely – China still faces a substantial set of duties under other US trade actions – the shift lowers China’s overall effective rate. China continues to be subject to a wide range of nonIEEPA tariffs, including: Section 301 tariffs, aimed at addressing unfair trade practices, range from 7.5% to 100% depending on the product category. Section 232 tariffs, imposed on national security grounds, range from 10% to 50% across steel, aluminium, and related sectors. Taken together, these tariffs still cover roughly 30% of US imports from China, which is far from insignificant. Even with those layers still intact, the IEEPA rollback is a meaningful positive. It lowers China’s average tariff load, helps restore some price competitiveness (especially in consumer goods), and introduces upside potential for China’s export momentum in the near term. There’s also a decent chance this shift triggers frontloading, as Chinese exporters may try to ship more goods quickly to lock in the lower tariff exposure while they can. The broader US-China trade backdrop remains fragile, but for now, the tariff landscape is clearly more favourable for China. Notable win for India as it finalises the interim trade pact The removal of elevated IEEPA tariffs delivers a significant reduction