TOKYO — Like a horror film villain everyone thought was dead, Donald Trump’s tariffs are suddenly back — and the timing couldn’t be more unsettling for Asia’s embattled economies.
Despite the US Supreme Court striking down his “Liberation Day” tariffs, Trump has wasted no time reloading. He’s imposed fresh levies of at least 10% on 60 countries, sweeping up China, India, Japan, South Korea, Taiwan and the European Union in one broad stroke.
The stated rationale: punishing nations that his trade team accuses of using forced labor, or of importing from countries that do. China is the marquee target — its Xinjiang province is home to state-run forced labor factories at a scale the world can’t ignore.
But the timing couldn’t be worse. From Japan to India to Indonesia, Asian economies are already buckling under the twin shocks of the Iran war and its economic fallout — oil stubbornly near $100 a barrel, fertilizer costs spiraling, inflation gnawing at whatever growth remained.
Now throw US import taxes into the mix. The Supreme Court setback clearly hasn’t neutralized Trump’s trade agenda, as Nick Marro of the Economist Intelligence Unit puts it: the tariffs are coming back, just through a different door.
This is Trump trying to resurrect the import levies struck down as unconstitutional last year — and a signal that his decades-long fixation with “reindustrializing” America behind towering tariff walls is winning out over the more immediate political pressure to keep everyday goods affordable.
The legal vehicle this time is Section 301 of the Trade Act of 1974, invoked through fresh investigations by the Trump administration. Other statutes — some decades old, some older still — are reportedly under exploration too. The message is clear: this is not the end of it.
“Investors should be prepared for headline risk of rising tariffs across these countries,” notes economist Henrietta Treyz at advisory Veda Partners.
John Denton, secretary-general at International Chamber of Commerce, notes that “applying a single investigatory framework across 60 economies, including longstanding US allies and parties to existing bilateral trade agreements, will create significant compliance uncertainty for businesses operating in global supply chains.”
The tariffs arrive on top of another deepening crisis: a currency rout sweeping the region. Since the US and Israel attacked Iran on February 28, Asian currencies have been in free fall. As the dollar surges and inflation runs hot globally, the Japanese yen, Indonesian rupiah, Indian rupee and Philippine peso are all under severe strain.
Tokyo is feeling it most acutely. Japan’s Ministry of Finance and the Bank of Japan are mounting their most aggressive defense of the yen since 1991.
On June 3, Prime Minister Sanae Takaichi issued a pointed warning: authorities are prepared to intervene. “Speculative trading that is not based on real demand is having a big impact on the currency market,” she said.
All this means Tokyo officials “have definitely put 160 in neon as a level” to watch for fresh yen-buying efforts, notes Bart Wakabayashi, strategist at State Street. Brent Donnelly, president at analytics firm Spectra Markets, adds that intervention odds “click substantially higher if 162 trades.”
The problem is that Japan gets at least 95% of its oil from the Middle East. The longer oil trades near $100 a barrel, the more Asia’s second-biggest economy is at risk of importing even higher inflation. Food prices, too, are expected to tick higher in the months ahead, even if the Strait of Hormuz is reopened in short order.
This dynamic is exacerbated by the weak-yen policy Japan has pursued since the late 1990s, especially since 2013 under then-Prime Minister Shinzo Abe, Takaichi’s mentor.
“The war in Iran not only directly raises global commodity prices but also puts downward pressure on the yen,” notes economist Richard Katz, author of the Japan Economy Watch newsletter.
Katz adds that Japan’s “foodflation is caused not only by rising commodity prices in global markets but also by the sharp depreciation of the yen triggered by the monetary ‘arrow’ of Abenomics.”
As Katz points out, “food is highly import-intensive, from food itself to feed grains, energy, fertilizer, etc. Depending on how long the Iran standoff lasts, prices will take another hit. It’s not just energy but also petrochemicals.” Katz points to Zen-Noh, the farm cooperative, saying it will likely raise fertilizer prices 14% for the autumn planting.
But the yen isn’t even Asia’s most dramatic currency story right now. That distinction belongs to Indonesia, where the rupiah crashed past 18,000 per dollar for the first time this week, thrusting Southeast Asia’s largest economy into global headlines for all the wrong reasons.
Weak current account figures and budget concerns had already rattled investors. What’s accelerating the selloff is something more corrosive: a systematic assault on Bank Indonesia’s independence.
Indonesian President Prabowo Subianto has been chipping away at the central bank’s autonomy since taking office in October 2024. The first major blow came in September 2025, when he ousted Finance Minister Sri Mulyani Indrawati — the former World Bank managing director who had long been seen as the primary check on fiscal overreach.
Now parliament has approved an amendment expanding BI’s mandate to encompass economic growth, effectively opening the door to political interference in monetary policy.
The danger, as economist Yose Rizal Damuri of the Centre for Strategic and International Studies warns, is that government meddling in rate decisions becomes normalized — routine, in his word. Caught between a weakening currency and a weakening institutional framework, Bank Indonesia is now scrambling to stabilize both.
In Mumbai, the Reserve Bank of India is engaged in an intense battle with currency speculators as the rupee falls to all-time lows. While “inflation pressure is building,” the “bigger concern is external stability,” says economist Gaurav Ganguly at Moody’s Analytics. “A weaker rupee, higher oil prices, and current account pressure have pulled foreign exchange management to the center of the policy debate.”
In 2025, the rupee’s 5% decline made it Asia’s worst-performing currency. Less than six months into 2026, the rupee is already down 6.5%, despite aggressive RBI intervention. All this challenges the “Goldilocks moment” spin that Prime Minister Narendra Modi’s Bharatiya Janata Party promulgated at the start of the year. If Indian growth and inflation were really as perfectly aligned as Modi claims, the exchange rate wouldn’t be in freefall.
Enter new US tariffs, which are sure to ratchet up the tension for Asian markets.
US officials are struggling to explain why tariffs are bursting back onto the scene. US Trade Representative Jamieson Greer argues that current global conditions “create a dynamic where American workers are forced to compete globally on an unlevel playing field. We will no longer tolerate this disparity.”
Yet many key US allies have been quick to register their displeasure. The EU slammed the new tariff as “unjustified.” Australia’s trade ministry said that “any tariffs on Australian exports to the United States are unjustified and inconsistent with our free trade agreement.”
Nor is Japan’s government happy about facing a 12.5% US tariff. “The tariff policies of the second Trump administration are creating significant uncertainty in the global economy,” says Toshihiro Okubo, economist at Tokyo’s Keio University. “The imposition of additional tariffs and reciprocal duties is undermining the stability of the multilateral free trade system and forcing countries to respond to it.”
Okubo explains that Japan’s globalization has followed a different path from that of Europe and the US, thanks to an aging population and a declining birthrate.
“Maintaining free trade, promoting inward investment, and redesigning labor mobility all involve balancing economic rationality with social acceptability. Amidst a shaky global economy, Japan should pursue neither extreme openness nor isolation, but rather a sustainable globalization strategy shaped by thorough deliberation.”
There’s a further wrinkle, notes Madeline Chalecki, economist at the Atlantic Council’s GeoEconomics Centre: what happens to the earlier tariff deals Trump struck under the International Emergency Economic Powers Act?
Countries that thought they had secured favorable terms may find the ground shifting beneath them. Japan, South Korea, Switzerland, and Liechtenstein all negotiated agreements capping tariffs at 15%.
The critical unknown is whether the new Section 301 levies will stack on top of existing most-favored-nation rates — as they do for all China-related tariffs. The situation is further complicated by the EU, which is still in the process of ratifying its own deal with Washington.
If the tariffs do stack, Chalecki warns, the fallout could be swift. The EU agreement could collapse, triggering retaliation. That’s likely why, she argues, the administration will probably hold the line at 15% — stacking tariffs above that threshold would generate significant revenue ($34 billion annually from EU imports, $6.3 billion from Japan, $4.3 billion from Korea, $3.2 billion from Switzerland) but at a potentially destabilizing political cost few in Washington want to pay right now.
The strategy may also backfire at home. Economist Jenny Gordon of the Lowy Institute points to a telling precedent: in November 2025, the Trump administration quietly backed down on tariffs covering imported bananas, coffee, and beef after pushback from MAGA voters feeling the pinch at the grocery store. The same political pressure hasn’t gone away. “The Trump administration has a problem with some MAGA constituents,” she says.
UBS economist Paul Donovan sees a structural problem compounding it. Previous Trump tariffs were largely passed through to consumers — but when many of those levies were later lifted, retail prices didn’t follow. Companies pocketed the difference.
That pattern has consequences: consumers may now reflexively blame tariffs for any future price increases, whether or not tariffs are actually the cause. In an environment already thick with inflation anxiety, that perception risk alone could prove politically costly.
With new tariffs unlikely to make Trump any friends abroad or at home, the timing – and the logic behind them – is hard to square. All that is clear is that Asian economies will spend the second half of 2026 looking over their shoulders.
Follow William Pesek on X at @WilliamPesek
