The U.S. Supreme Court's ruling on May 20 invalidating reciprocal tariffs has also put the brakes on President Donald Trump's offensive against China. With the summit scheduled for three days starting July 31 now just a month away, analysts suggest that the nullification of reciprocal tariffs—Trump's most powerful pressure tool against Beijing—could shift negotiating leverage toward China. Some observers raise the possibility that China may pressure the weakened Trump administration for additional concessions, including relaxation of semiconductor export controls or suspension of arms sales to Taiwan.
According to foreign news reports compiled on May 22, the ruling invalidated the 20% tariff on Chinese imports, which comprised 10% reciprocal tariffs and 10% fentanyl tariffs. Although Trump declared a 15% tariff on all countries immediately after the ruling, this is lower than the previous 20% imposed on China. Notably, measures that once raised pressure to as high as 125% in additional tariffs were all based on the International Emergency Economic Powers Act (IEEPA) and can no longer be utilized. The Yale Budget Lab analyzed that the effective U.S. tariff rate on Chinese imports has fallen to about two-thirds of its previous level.
Experts agree that the ruling has hamstrung Trump's China pressure strategy. Scott Kennedy, senior adviser at the Center for Strategic and International Studies (CSIS), said, "Trump was already on the defensive in the trade war." He added, "This tariff rollback confirms the weakness they (China) perceived."
A Beijing-based political scientist, speaking on condition of anonymity, told the South China Morning Post (SCMP), "Trump was caught off guard while preparing for his China visit."
Given these circumstances, observers note that China is unlikely to fulfill its promise to purchase American soybeans that the U.S. had sought. At the Busan summit last October, China pledged to resume purchases of American soybeans in exchange for the U.S. reducing fentanyl tariffs from 20% to 10%, and subsequently bought 12 million tons in partial fulfillment. However, with the tariffs now completely invalidated and cheaper Brazilian soybeans entering full harvest since March, China has little reason to honor its commitment. Since Midwestern soybean farmers represent a core Republican constituency, China's failure to deliver could deal a critical blow to Trump ahead of November's midterm elections.
Observers also raise the possibility that China, holding both rare earth and soybean cards, may demand further concessions from the U.S. Beyond relaxation of export controls on semiconductors and other advanced technologies, Beijing could bring the Taiwan issue—which did not make it to the negotiating table last October—back to the forefront. During the two leaders' phone call earlier this month, Chinese President Xi Jinping strongly pressed the U.S., saying it "must exercise extreme caution regarding arms sales to Taiwan." Trump himself made an unusual public acknowledgment that the Taiwan issue was discussed, signaling room for negotiation, and has reportedly placed arms sales on hold recently.
Meanwhile, countries around the world have entered wait-and-see mode following the tariff ruling. While reciprocal tariffs have been invalidated, nations are closely monitoring the aftermath of Trump's declaration of a 15% global tariff. The European Union is scheduled to hold an emergency meeting on May 23 to review its trade agreement with the United States.
Canada and Mexico, which had been exempt from reciprocal tariffs under the United States-Mexico-Canada Agreement (USMCA) but were subject to fentanyl tariffs, showed subtly divergent positions. Canada, which had taken a hardline stance against the U.S., celebrated after its 35% fentanyl tariff was lifted by the ruling, stating it "supports the Canadian government's position that the tariffs were not justified." Mexico, however, signaled reluctance to antagonize Trump, saying it "must approach this carefully."