The US Supreme Court’s decision to invalidate tariffs imposed by former President Donald Trump has injected a new dynamic into already complex US-China relations, forcing both nations to recalibrate their strategies ahead of a planned summit in Beijing. While the ruling appears to strengthen China’s negotiating position, analysts suggest Beijing will likely proceed with caution, mindful of Trump’s continued willingness to pursue alternative trade measures.
The court’s ruling, delivered on , struck down Trump’s use of the International Emergency Economic Powers Act (IEEPA) to justify the broad imposition of tariffs. This setback for the former president has prompted a swift response, including a temporary 10% global tariff, later raised to 15%, and a search for alternative legal avenues to impose import duties. Trump, speaking to reporters, underscored the economic challenge posed by China, stating, “China had hundreds of billions of dollars in surpluses with the United States. They rebuilt China. They rebuilt the army. We built China’s army by allowing that to happen.” He added, “I have a great relationship with President Xi, but he respects our country now.”
Despite Trump’s defiant rhetoric, experts believe Beijing will avoid overtly exploiting the court’s decision. Sun Yun, director of the China program at the Stimson Center, explained, “It will give China a moral boost in their negotiations with Trump’s team ahead of the summit, but they are prepared for the scenario that nothing actually changes in reality.” This cautious approach reflects an understanding that Trump retains other options for imposing trade restrictions.
The upcoming summit, scheduled for to , is seen as a crucial opportunity to stabilize the fragile trade truce established last year. Both sides are keen to avoid an all-out trade war that would disrupt the global economy. However, underlying tensions remain, particularly regarding US support for Taiwan, which analysts anticipate China will address during the discussions.
Wendy Cutler, senior vice president at the Asia Society Policy Institute, described the Supreme Court ruling as having “effectively had his wings clipped on his signature economic policy.” She suggests the Trump administration will likely seek alternative legal justifications for tariffs, potentially focusing on China’s compliance with previous trade agreements. The Office of the US Trade Representative is currently conducting an investigation into this matter, which could provide a basis for renewed tariffs if China is found to be in violation.
China’s Commerce Ministry has indicated it is assessing the impact of the ruling, with spokesperson Liu Pengyu stating that trade wars are not in the interest of either country and calling for cooperation to “provide greater certainty and stability for China-US economic and trade cooperation and the global economy.”
The implications of the court’s decision extend beyond the immediate US-China relationship. Other US trading partners, particularly in Asia, are now reassessing their own trade arrangements in light of the shifting landscape. Dan Kritenbrink, a partner at The Asia Group and former assistant secretary of state for East Asian and Pacific affairs, anticipates a cautious approach from these nations, with existing agreements likely to remain in place while both sides navigate the implications of the ruling. He specifically noted the importance of monitoring the impact on Japan, given its close alliance with the US and deteriorating relations with Beijing.
The situation is further complicated by Trump’s previous use of emergency powers to impose tariffs, including a 20% levy on Chinese goods justified by concerns over the flow of chemicals used in fentanyl production. He later reduced this “fentanyl tariff” to 10% in exchange for renewed Chinese cooperation in restricting the export of precursor substances. This demonstrates Trump’s willingness to utilize various legal authorities to achieve his trade objectives, a point acknowledged by Gabriel Wildau, a managing director at Teneo, who believes Beijing anticipates tariffs could be reimposed “with only modest difficulty.”
Representative Ro Khanna, the top Democrat on the House Select Committee on the Chinese Communist Party, has urged the administration to develop a more robust strategy to address what he termed China’s “unfair trade practices,” advocating for a collaborative approach with allies and partners.
Ali Wyne, a senior research and advocacy adviser at the International Crisis Group, suggests Xi Jinping is unlikely to directly challenge Trump on the tariff ruling during the summit. Instead, he anticipates a focus on building rapport with the US president, which could increase the likelihood of a sustained trade truce and potentially lead to security concessions that offer China greater flexibility in the Asia-Pacific region. The delicate balance between asserting leverage and maintaining a constructive dialogue will be central to the dynamics of the upcoming meeting in Beijing.
