Supreme Court tariff ruling boosts China’s leverage before Trump-Xi summit

Analysts said the US Supreme Court’s decision to strike down President Donald Trump’s sweeping tariffs strengthens China’s hand ahead of a summit with his counterpart Xi Jinping, where Beijing is expected to pressure him to reduce US support for Taiwan.

In its ruling on Friday, the court said Trump wrongfully invoked the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs.

Wendy Cutler, senior vice president of the Asia Society Policy Institute, said the decision weakens Trump’s negotiating power as he prepares for his trip to Beijing in April.

“He has effectively clipped his wings on his idiosyncratic economic policy,” said Cutler, who is also a former U.S. trade representative.

Trump will visit China from March 31 to April 2; This will be the first visit by an American president since his last visit in 2017. Xi is also expected to make an official visit to Washington later this year.

Analysts said the decision could change the dynamics around efforts to extend a trade truce negotiated last year and complicate Trump’s push for Beijing to buy large amounts of U.S. soybeans, Boeing aircraft and energy exports.

“This limits Trump’s ability to impose tariffs at will, reduces pressure on Beijing to expand soybean purchases or ease access to rare earths, and gives China the power to push for the removal of the remaining 10% tariffs tied to fentanyl,” said Dan Wang, China director at Eurasia Group.

Xinbo Wu, director of the Center for American Studies at Fudan University, said Beijing could use the opportunity to pressure Washington to ease technology export controls, remove some Chinese assets from the US sanctions list and cut arms sales to Taiwan.

“[The ruling] “This definitely helps strengthen China’s position in negotiations with the United States,” Wu said.

One expression On Monday, China’s Ministry of Commerce called on the United States to remove all unilateral tariffs on its trading partners, while saying it was currently assessing the impacts from implementing the decision.

“China and the United States will gain from cooperation and lose from conflict,” according to the ministry’s statement translated by CNBC.

Following the Supreme Court’s decision, Trump responded by imposing a 10% global tariff under Section 122 of the Trade Act of 1974, which he later increased to 15%. “It takes effect immediately.”

One Real Social post On Saturday, Trump issued a warning that more tariffs would follow: “In the coming short months, the Trump Administration will identify and issue new, legally permissible Tariffs.”

It remains unclear whether any official documents detailing the timing have been signed. A. White House fact sheet released Friday The original 10% tariffs will go into effect at 12:01 a.m. ET on Tuesday, Feb. 24, he said.

Before the decision, Washington had imposed an additional 20 percent tariff on Chinese exports last year, including a 10 percent reciprocal tariff and a 10 percent fentanyl-related tariff, citing the IEEPA official. According to Goldman Sachs, the Supreme Court’s decision means a net reduction of around 5 percent in the customs duties imposed by the United States on China.

“Overall, this development points to upside risk to our positive outlook for Chinese exports this year,” Goldman said.

A. Study by trade watchdog Global Trade Alert it also named China among the biggest winners under the revised Section 122 tariff regime, with a 7.1 percentage point reduction in tariff rates.

John Gong, a former adviser to China’s Ministry of Commerce, said Beijing “does not base its strategies on the disagreement between China’s executive and judicial branches.” [U.S.] Although a lower tariff rate would be a ‘nice to have’ government.”

The U.S. Trade Representative’s Office said in October last year that China It appeared that he could not fulfill his commitments. Expanding market access, reducing nontariff barriers, and increasing purchases of U.S. goods and services despite repeated U.S. intervention to address enforcement concerns.

“When the United States determines that a country is an ‘unfair’ trading partner, Section 301 offers significant flexibilities in using tariffs or other measures,” said Deborah Elms, director of trade policy at the Hinrich Foundation.

China said on Monday it was “closely monitoring” a move by the United States to use trade investigations to pursue higher tariffs and vowed to “strictly protect” Chinese interests.

Scott Kennedy of the Center for Strategic and International Studies noted that the decision may have a limited impact on broader U.S.-China relations, with tensions extending beyond tariffs.

” [Supreme Court] “The decision does not upend U.S.-China relations as much as it does U.S. ties with its allies and others because China had already gained the upper hand,” he said.

Kennedy expects the April summit to deliver limited results, such as an extension of the ceasefire and sales of U.S. products, but progress on thorny issues such as clear guidelines on export controls or rebalancing the Chinese economy is unlikely.

In a phone call earlier this month, Xi suggested to Trump that Taiwan was the “most important issue” in US-China relations; This dwarfed the trade deals Trump touted at the time, including China’s purchases of American energy and agricultural products.

Minxin Pei, a political science professor at Claremont McKenna College, said upcoming talks between the two leaders could be more political than economic.

Pei said Xi might be “open to giving Trump a better trade deal” in exchange for a statement on Taiwan that Beijing could claim as a victory.

— CNBC’s Elaine Yu contributed to this story.