The US Supreme Court’s tariff ruling improves global sentiment, benefiting Malaysia’s exports, capital markets and ringgit, say economists.

KUALA LUMPUR: The United States (US) Supreme Court ruling limiting President’s unilateral tariff authority would improve global economic and market sentiment, with economists saying the development could benefit Malaysia’s exports, capital markets and currency outlook.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Bernama that the decision indicates that separation of powers remains effective in the US, which would limit policies that could potentially be harmful to the global economy.

He said that while the US President Donald Trump administration may still look for ways to implement protectionist measures, it may take time, and downside risks to the global economy may have receded somewhat.

“This would allow the global economy to grow at a much higher rate, which will benefit an open economy such as Malaysia,” he said, adding that Malaysia’s latest export print grew higher than expected at 19.6 per cent in January 2026.

Mohd Afzanizam said global financial markets would welcome such news, which may have a positive impact on Malaysia’s capital markets, including equities and bonds, while the ringgit could appreciate further against the US dollar.

Legal Clarity on Tariff Authority

Meanwhile, economist Dr Nungsari Ahmad Radhi said the Supreme Court decision effectively clarifies that tariffs constitute taxes, which cannot be imposed unilaterally by Trump without Congressional approval.

He said that while the US President could still pursue tariff measures through legislation, reliance on executive orders exposes such actions to legal challenges and may create uncertainty around trade arrangements.

“Anything imposed via executive orders will still be challenged, and this brings disrepute to whatever agreements are signed. The Supreme Court decision entails that all tariffs collected would need to be reimbursed,” he said.

On Feb 20, the Supreme Court struck down Trump’s International Emergency Economic Powers Act (IEEPA)-based tariffs, which included his infamous reciprocal tariffs.

In response, Trump inked a 10 per cent global tariff under Section 122 of the Trade Act of 1974, which has a time limit of 150 days.

Malaysian Exporters to Monitor Policy Execution

Meanwhile, IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the US Supreme Court decision does not overturn or renegotiate existing trade arrangements or access rights but instead restricts the legal basis under the IEEPA that had been used to impose broad tariffs.

He said the US has responded by invoking Section 122 to enact a temporary 10 per cent global import duty, describing it as a shift in legal mechanics rather than a restructuring of trade relationships.

“This means Malaysia’s trade arrangements remain valid and intact, and the focus for Malaysian exporters should be on monitoring policy execution, not anticipating the collapse of US market access based on the court ruling alone.

“The new 10 per cent tariff is being framed as a temporary, economy-wide duty rather than a targeted penalty on specific countries or goods, which is important for Malaysia as its exporters are not singled out under the new framework,” he told Bernama.

Temporary Tariff Limits Competitiveness Impact

Mohd Sedek said that as the measure is temporary for up to 150 days, the impact on trade arrangements and export volumes is likely to be limited in the short term, with businesses facing cost and planning uncertainty that is more sentiment-driven rather than a material interruption of trade relationships.

On competitiveness, Mohd Sedek said a material shift is unlikely in the near term as a temporary global tariff would be uniform across exporting countries, meaning Malaysia would not lose relative competitiveness versus regional peers, noting that electrical and electronics (E&E) and intermediate goods exports are positioned upstream in global value chains.

He said any impact is more likely to appear as short-term margin compression or pricing adjustments rather than demand relocation away from Malaysia, adding that Malaysia’s diversified export base and integration into regional supply chains support resilience.

Separately, in a note today, Hong Leong Investment Bank Bhd said the temporary tariff under Section 122 creates a “lower tariff window” while alternative measures are explored, which could prompt US importers to frontload purchases. 

It noted that for Malaysia, the 10 per cent global tariff represents a nine-percentage-point reduction from the earlier reciprocal tariff rate of 19 per cent, potentially supporting near-term export momentum, with electronics manufacturing services, gloves and selected technology names among sectors seen benefiting from recent tariff developments.

Since the signing of the Agreement on Reciprocal Trade (ART) on Oct 26 last year, Malaysia has repeatedly reiterated that Malaysia’s sovereignty, policy autonomy and national interests remain fully protected under the Malaysia-US ART.

Under the agreement, 1,711 Malaysian export product lines would enjoy tariff exemption when entering the US market, improving price competitiveness and strengthening Malaysia’s position as an important player in global supply chains.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said Putrajaya “takes note” of the US top court’s decision and is reviewing recent legal and policy developments in the US.

Johari also referred to Trump’s announcement of a temporary 10 per cent tariff, saying Malaysia was studying its scope and potential impact.

“At this stage, we are awaiting further clarity on how these measures will be implemented and whether additional adjustments will follow,” Johari said in a statement.

Engagement, Regional Coordination Key

On engagement with the US, Mohd Afzanizam said officials would communicate with their US counterpart, noting that, as the ART has not yet been implemented, technical aspects may need to be reviewed to align with the court decision, while Malaysia’s diplomatic approach could result in a win-win outcome and provide an opportune time to seek improved terms.

Alternatively, FSG Advisory Sdn Bhd chief executive officer Dr Anthony Dass said that, regarding Malaysia’s immediate and national-level actions, the nation may need to secure clarity on implementation by engaging with US authorities on the scope, exemptions, timelines, and product coverage. 

He also noted that the government should support exporters’ financial resilience through targeted trade finance and working-capital assistance for exporters facing temporary margin compression.

“Malaysia may also strengthen operational credibility by enhancing rules-of-origin compliance, customs efficiency, and export documentation reliability. Malaysia’s structural advantage lies in operational reliability,” he said.

Dass emphasised that ASEAN should implement coordinated regional measures by reinforcing itself as a stable supply-chain region, thereby helping position the bloc as a predictable and neutral production base.

He added that intra-ASEAN production integration should also be strengthened to allow firms to rebalance production within the region, while maintaining investor confidence through policy stability, as he believes consistency and predictability are now the primary competitive advantages.

 The Sun Malaysia