A U.S. Supreme Court decision striking down President Donald Trump’s tariffs has complicated U.S.-China relations, as both countries navigate the situation to avoid a trade war while seeking a strong negotiating position.
China is looking beyond tariffs
Analysts predict that Beijing will be cautious in exploiting the advantage gained from Friday’s court ruling, recognizing that Trump has other avenues for levying taxes. Both sides also aim to maintain a fragile trade truce and stabilize ties before Trump’s upcoming trip to Beijing.
“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,” said Sun Yun, director of the China program at the Stimson Center, a Washington-based think tank.
Trump has options
Trump responded to the defeat by announcing a temporary 10% global tariff, which he later raised to 15%, and indicated he would pursue alternative paths for import duties. He justified the tariffs by citing China’s challenge to U.S. economic, technological, and military dominance.
“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,” Trump told reporters Friday. He added, “I have a great relationship with President Xi, but he respects our country now.”
The White House has confirmed that Trump will travel to China on March 31 through April 2 to meet President Xi Jinping.
Xi is unlikely to forcefully emphasize the Supreme Court ruling during the meeting with Trump, instead focusing on strengthening rapport with the U.S. president, according to Ali Wyne, a senior research and advocacy adviser focused on US policy toward China at the International Crisis Group.
The more that Xi can do that, “the more likely it is that the fragile trade truce between the United States and China will take hold in earnest and that Trump will be amenable to security concessions that give China greater freedom of manoeuvre in Asia,” Wyne said.
Chinese Embassy spokesperson Liu Pengyu stated that trade wars benefit neither country and called for cooperation to provide stability for China-US economic and trade relations and the global economy.
The court decision also introduces uncertainty for other U.S. trading partners, particularly those with trade deals intended to mitigate the initial impact of Trump’s tariffs. Dan Kritenbrink, a partner at The Asia Group, expects most Asian partners to proceed cautiously, with existing agreements largely remaining in place as both sides assess the implications.
Trump previously invoked emergency powers to impose 20% tariffs on Chinese goods due to concerns about fentanyl precursors, later expanding these to sweeping reciprocal tariffs on many countries, including China. These tariffs temporarily reached triple digits before both sides reached a one-year truce with a 10% baseline tariff and a reduction of the fentanyl tariff to 10%, with Beijing resuming cooperation on restricting opioid precursor exports.
Wendy Cutler, vice president of the Asia Society Policy Institute, suggested the Trump administration could quickly develop a Plan B, potentially utilizing an ongoing investigation into China’s compliance with a previous trade agreement as justification for new tariffs. Representative Ro Khanna urged a tougher strategy to hold China accountable for unfair trade practices.
Gabriel Wildau, a managing director at Teneo, noted that Trump has demonstrated a willingness to use various legal authorities to impose tariffs on China and that Beijing anticipates the tariffs could be maintained or recreated with relative ease, while still hoping to persuade Trump to lower them in exchange for concessions.
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