US President Donald Trump is shown speaks in Washington, DC, on January 6. (©Getty via Kyodo)
In the wake of the United States Supreme Court's February 20 ruling striking down much of President Donald Trump's reciprocal tariff regime, confusion has rippled through global capitals and boardrooms.
The court held that the president's use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs exceeded executive powers and encroached on Congress's prerogative to levy taxes.
Four days later, however, Trump moved quickly to reassert control, announcing a separate 10% across-the-board tariff under Section 122, which permits temporary duties of up to 150 days. He has also signaled that the rate could rise to 15%.
A Hard-Won Ceiling
For Japan, the implications are complicated. Tokyo was among the first to strike a deal with Washington in July 2025, securing a 15% cap on reciprocal tariffs for its exports.
The agreement covered automobiles and auto parts, one of Japan's largest export categories, lowering the rate from the previously threatened 25%.
William Chou, senior fellow at the Hudson Institute, said that for Japan, "it's really about sticking to the course."
"The Supreme Court ruling struck down the IEEPA tariffs, but not the Section 232 tariffs on automobiles, semiconductors, and pharmaceuticals," Chou said. "Japan values these the most and negotiated them down to 15%. They would be under threat if Japan attempts to renegotiate."
Given the recent shift, Chou added that Tokyo will likely seek to prevent follow-on measures, such as Section 122 and possible Section 301 tariffs, from eroding the terms it secured earlier.
Losing Competitive Edge
As with Japan, neighboring South Korea had earlier reached a similar 15% baseline, paired with a $350 billion investment commitment in the United States. Several Southeast Asian nations, including Malaysia, Indonesia, and Thailand, settled at 19%. India more recently agreed to an 18% rate.
Now, with Washington imposing a fresh 10% baseline on all countries, some experts say Japan's competitive edge could narrow.
"Even if the reciprocal framework is ultimately invalidated, President Trump has already imposed alternative tariffs, so Japan is unlikely to experience any major immediate impact," said Ke Long, an economist at the Tokyo Foundation.
Still, he noted, the reset could offer relative advantages to countries such as Canada and China, which have faced steeper levies in certain sectors.
Investment as Insurance
The recalibration has also left Japanese companies reassessing the broader investment framework Tokyo signed last summer in exchange for tariff relief.
Under that agreement, Japan pledged $550 billion in investments, loans, and loan guarantees through government-backed institutions to support projects in the US. The targeted sectors — shipbuilding, semiconductors, artificial intelligence, and other critical industries — were chosen with long-term technological competition in mind.
While profit-sharing terms remain uncertain, the first tranche of projects, worth roughly $36 billion, was unveiled in mid-February.
"The projects that Japan has invested in are connected to AI, energy, and semiconductor sectors," Chou said. "They are all strategically important and vital to our collective economic resiliency."
Despite the turbulence surrounding tariffs, he argued that the broader strategic investment framework is unlikely to be affected as the "US-Japan strategic industrial fund was designed to advance mutual economic security."
The China Factor
Beyond trade mechanics, the latest ruling carries geopolitical weight.
Trump's tariff campaign, which began on April 2, 2025, on what he dubbed "Liberation Day" in a Rose Garden address, was widely seen as part of a broader bid to pressure Beijing, which Washington increasingly views as its primary strategic competitor.
The Trump administration sharply raised duties on Chinese imports, with overlapping levies driving effective tariff levels far above historical norms, before scaling them back to roughly 32% last May.
With the new uniform baseline tariff, some analysts argue that Washington's leverage over Beijing may weaken ahead of Trump's April visit to China, potentially creating an opening for Japan.
"The immediate priority for Japan should be to strengthen cooperation with the Trump administration, particularly as a way to recalibrate its increasingly strained relationship with China," Long said.
As several European nations distance themselves from Trump while edging closer to Beijing on trade, he added, the US president may find himself more isolated. In that environment, "it could be strategically advantageous for Tokyo to demonstrate that it is a reliable and genuine partner to the United States."
Backed by a strengthened mandate after a historic Lower House election victory, Japanese Prime Minister Sanae Takaichi will head to Washington in March for a state visit. During Trump's earlier trip to Tokyo, the two leaders pledged to usher in a "golden age" of bilateral ties.
Before Takaichi's visit, "the best-case scenario is to ensure all previously agreed-upon measures are implemented as promised," Long said.
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Author: Kenji Yoshida
