The supreme court ruling on Donald Trump’s tariffs has weakened his hand in negotiations with China. The implications could go far beyond trade.
Trump loses his best lever
Last Friday’s supreme court ruling striking down some of Trump’s tariffs came just after the White House confirmed the president would visit China from March 31st to April 2nd. The court’s decision changes the context of that visit, strengthening Xi Jinping’s hand in negotiations over trade and other elements of China’s relationship with the United States.
The court found that Trump exceeded his authority when using the International Emergency Economic Powers Act (IEEPA) to impose a range of tariffs since January 2025.
Those affected include the sweeping “reciprocal” tariffs imposed on almost every country and those levied on Canada, Mexico and China over fentanyl and on Brazil over the prosecution of former president Jair Bolsonaro. The ruling removes Trump’s threat to impose tariffs on countries that buy oil from Russia or trade with Iran.
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Although he can impose new tariffs, he will have to use different legal authorities that are generally time-limited, will take longer to come into force, are likely to face legal challenge or require congressional approval.
The new, global 15 per cent tariff is limited to 150 days and it applies to all countries so that some US allies such as Britain and Australia will now pay a higher tariff while China’s will fall sharply.
What Trump has lost with the IEEPA is a tariff switch he could turn on and off at will, an instrument that he deployed not only in trade disputes but to advance broader foreign policy goals. His remaining options are not only less flexible but less effective as instruments of intimidation because they don’t have such an immediate, disruptive impact on those targeted.
China’s first response is likely to come from its manufacturers, who will rush to fulfil a likely flood of orders from US importers eager to front-load supplies while the global 15 per cent tariff lasts. This will offer a welcome short-term boost to China’s economy, giving Beijing more room for manoeuvre if its trade talks with Washington turn difficult again.
Trump wants China to buy more American agricultural products and to place a big order for Boeing aircraft, while guaranteeing the supply to US industry of rare earth minerals required for advanced manufacturing. Xi wants access to more advanced semiconductors, the removal of restrictions on Chinese companies operating in the US and a reduction of American support for Taiwan.
Specifically, Xi wants Washington to halt a new, planned arms sale to Taipei and would like Trump to state that the US does not support independence for Taiwan. Trump’s repetition last week of his false claim that Taiwan stole the US semiconductor industry reflects a lack of sympathy with the self-governing island that Beijing views as an opportunity.
China, in common with Washington’s other trading partners, is unlikely to immediately resile from agreements it has already made with the Trump administration. But elements of all of those agreements are now open to picking apart and some countries will slow down the process of implementing them.
The US has already accused Japan and South Korea of slow-walking the implementation of promises to buy more American goods and to invest hundreds of billions of dollars in the US. No longer subject to the threat of a sudden, immediate tariff hike, many countries will take their time on implementation until they see the outcome of November’s congressional elections.
Trump’s loss of leverage over other countries also benefits China because it makes it harder for him to bully others into adopting measures hostile to Beijing. Meanwhile, China will continue to present itself as a more reliable, predictable trading partner that remains committed to the international, rules-based system.
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