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

The US Supreme Court’s decision to overturn sweeping tariffs imposed by President Donald Trump has strengthened China’s position ahead of a summit with his counterpart Xi Jinping, where Beijing is expected to push for a reduction in US support for Taiwan, analysts said.

In Friday’s court ruling He said Trump has wrongly invoked the International Emergency Economic Powers Act (IEEPA) to implement broad tariffs.

The decision weakened Trump’s negotiating leverage as he prepared for a trip to Beijing in April, said Wendy Cutler, senior vice president of the Asia Society Policy Institute.

“He has really clipped his wings in terms of his distinctive economic policy,” said Cutler, who was also a former US trade representative.

Trump is scheduled to visit China from March 31 to April 2, the first trip by a US president since his last visit in 2017. Xi is also expected to make a state visit to Washington later this year.

Analysts said the ruling could change the dynamics surrounding efforts to extend a trade truce negotiated last year and complicate Trump’s push to persuade Beijing to purchase large quantities of US soybeans, Boeing aircraft and energy exports.

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

For Beijing’s part, it could use the opportunity to pressure Washington to relax technology export controls, remove some Chinese entities from US sanctions lists, and reduce arms sales to Taiwan, said Xinbo Wu, director of the Center for American Studies at Fudan University.

“[The ruling] This certainly helps strengthen China’s position in its negotiations with the United States.”

In a statement China’s Ministry of Commerce said on Monday that it was currently assessing the implications of implementing the ruling, while urging the United States to remove all unilateral tariffs against its trading partners.

“China and the United States will benefit from cooperation and lose from confrontation,” the ministry’s statement, translated by CNBC, said.

Following the Supreme Court ruling, Trump responded by imposing a 10% global tariff under Section 122 of the Trade Act of 1974 — before raising it again to 15%, which the president said would amount to… “Effective immediately.”

In a Truth is a social function On Saturday, Trump sounded a warning that more tariffs would follow: “Over the next 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 The White House issued a fact sheet on Friday He said the original 10% tariff would go into effect on Tuesday, February 24 at 12:01 a.m. ET.

Before the ruling, Washington imposed an additional 20% tariff on Chinese exports last year — including a 10% reciprocal tariff and a 10% fentanyl-related tariff — citing IEEPA authority. The Supreme Court ruling means a net reduction of about 5% in US tariffs on China, according to Goldman Sachs.

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

A A study conducted by trade watchdog Global Trade Alert China also ranked among the biggest winners under the revised Article 122 tariff regime, with a 7.1 percentage point reduction in tariff rates.

Jun Gong, a former advisor to the Chinese Ministry of Commerce, said that Beijing “does not bet its strategy on the conflict between the executive and judicial branches in China.” [U.S.] “The government, although the low tariff rate is nice.”

The US Trade Representative’s Office said in October last year that China It appears that it did not fulfill its obligations Expanding market access, lowering non-tariff barriers, and increasing purchases of US goods and services, despite frequent US engagement to address implementation concerns.

“Once the United States determines that a country is an ‘unfair’ trading partner, Section 301 brings great flexibility to use tariffs or other measures,” said Deborah Elms, head of trade policy at the Heinrich Foundation.

China said Monday it was “closely monitoring” the United States’ move to use trade investigations to maintain high tariffs, vowing to “firmly protect Chinese interests.”

The ruling may have limited impact on broader US-China relations, said Scott Kennedy of the Center for Strategic and International Studies, who noted that tensions extend beyond tariffs.

“the [Supreme Court] He said the ruling does not upend US-China relations as it might do to US relations with its allies and others, because China already had the upper hand.

Kennedy expects the April summit to produce limited results, such as extending the ceasefire and sales of US products, but progress is unlikely on thorny issues such as clear guidelines for export controls or rebalancing the Chinese economy.

During a phone call earlier this month, Xi assured Trump that Taiwan was the country “The most important issue” In relations between the United States and China – which cast a shadow over the trade deals promoted by Trump at the time, including Chinese purchases of American energy and agricultural products.

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

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

— CNBC’s Elaine Yu contributed to this story.