Trump Loses Tariff Leverage as China Gains Upper Hand in Talks

※ Global Morning Briefing summarizes global news from Seoul Economic Daily.

Trump's China Offensive Stalled After Reciprocal Tariffs Invalidated

The U.S. Supreme Court's ruling on the 20th (local time) declaring reciprocal tariffs unlawful has also put the brakes on President Donald Trump's offensive against China. With just one month remaining before a three-day summit scheduled to begin on the 31st of next month, analysts say that the invalidation of reciprocal tariffs—Trump's most powerful tool for pressuring China—could shift negotiating leverage toward Beijing. Some observers suggest China may now pressure a weakened President Trump for additional concessions, such as easing semiconductor export restrictions or halting arms sales to Taiwan.

According to foreign media reports compiled on the 22nd, the ruling invalidated the 20% tariff on Chinese imports (10% reciprocal tariff plus 10% fentanyl tariff). Although President Trump announced a 15% tariff on all countries immediately after the ruling, this is lower than the previous 20% imposed on China. Notably, measures that once escalated pressure with additional tariffs of up to 125% were all based on the International Emergency Economic Powers Act (IEEPA) and can no longer be used. The Yale Budget Lab analyzed that the effective U.S. tariff rate on Chinese imports has fallen to two-thirds of its previous level.

Experts unanimously agree that this ruling has hamstrung President 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. This tariff rollback solidifies the weakness [of President Trump] in their [China's] eyes." A Beijing political scientist who requested anonymity told the South China Morning Post (SCMP), "Trump was caught off guard while preparing for his China visit."

Given these circumstances, observers note China is now likely to abandon its promised soybean purchases that the U.S. had sought. At the Busan summit last October, China pledged to resume purchasing U.S. soybeans in exchange for the U.S. reducing fentanyl tariffs from 20% to 10%, and subsequently purchased 12 million tons, partially fulfilling the commitment.

However, with the tariffs now invalidated and cheaper Brazilian soybeans entering harvest season starting in March, China has little reason to honor its pledge. Since Midwestern soybean farmers are a core Republican constituency, China's failure to fulfill its promise could deal a severe blow to President Trump ahead of November's midterm elections.

Some also suggest China, holding both rare earth minerals and soybeans as leverage, may demand further concessions from the U.S. Beyond easing export restrictions on semiconductors and other advanced technologies, Beijing could bring the Taiwan issue—which was kept off the negotiating table last October—back to the forefront.

During a phone call between the two leaders earlier this month, Chinese President Xi Jinping strongly pressured the U.S., saying it "must be extremely cautious about arms sales to Taiwan." President Trump also made an unusual public acknowledgment that the Taiwan issue was discussed, signaling room for negotiation, and has reportedly put arms sales on hold recently.

Following the tariff ruling, countries around the world have entered a wait-and-see mode. While reciprocal tariffs have been invalidated, nations are closely monitoring the aftermath of President Trump's declaration of 15% global tariffs. The European Union (EU) is scheduled to hold an emergency meeting on the 23rd to review trade agreements with the U.S. Canada and Mexico, which had been exempt from reciprocal tariffs under the U.S.-Mexico-Canada Agreement (USMCA) but subject to fentanyl tariffs, showed subtly divergent positions. Canada, which had been in a standoff with the U.S., welcomed the ruling that exempted it from the 35% fentanyl tariff, stating it "supports the Canadian government's position that the tariffs were unjustified." Mexico, however, took a more cautious approach, saying it "must proceed carefully," appearing reluctant to provoke President Trump.

"Supreme Court's Tariff Ruling May Increase Likelihood of Iran Attack"

The invalidation of reciprocal tariffs is increasingly likely to become a variable in a potential U.S. attack on Iran. While observers suggest President Trump, facing a political crisis, may become more aggressive toward Iran, some analysts say he could step back even if an attack succeeds, given remaining uncertainties and the need to focus on tariff solutions.

According to the Wall Street Journal (WSJ) on the 21st (local time), Wilbur Ross, who served as Commerce Secretary during President Trump's first term, said, "The Supreme Court's ruling declaring tariffs unconstitutional could increase the likelihood of an Iran attack. Trump cannot be seen accepting this defeat and backing down on Iran."

Previously, President Trump demanded that Iran halt nuclear enrichment, limit ballistic missiles, and stop supporting proxy militant groups. He also reinforced U.S. military presence in the region, deploying the largest military force in the Middle East since the 2003 Iraq invasion.

President Trump has indicated he would consider options ranging from limited preemptive strikes to prolonged bombing campaigns if Iran refuses his demands. Iran has responded that it will present a draft agreement within days, while warning of retaliation—saying it would "at least slap back" if the U.S. attacks. The New York Times has expressed concern that unlike last year, if Iran launches a strong counterattack, U.S. forces could also suffer significant casualties.

Even if the U.S. attacks Iran and achieves a short-term victory, burdens will remain. U.S. government officials have assessed that even if this war topples Iranian Supreme Leader Ali Khamenei, the situation would remain highly uncertain. While reaching an agreement to prevent nuclear development would be a historic breakthrough, ordering an attack to pressure or topple the Iranian regime risks embroiling the administration in a large-scale conflict for the remainder of its term. Suzanne Maloney, an Iran expert at the Brookings Institution, noted, "President Trump's options are not very attractive." A senior White House official said, "There is no consensus within the administration to proceed with an Iran attack."

Trump's inner circle has argued for focusing on economic issues ahead of this year's midterm elections, as heightened military tensions on top of tariff-related public discontent could trigger a backlash. A closed-door briefing last week attended by White House staff and Republican campaign officials emphasized economic focus as the top election priority.

Russia-Ukraine War Marks 4 Years: 2 Million Casualties, 10 Million Displaced

The 24th (local time) marks four years since Russia invaded Ukraine and the war began. As of the 22nd, casualties from Ukraine and Russia have approached 2 million, with nearly 10 million internally displaced persons and refugees, leaving deep scars.

Neither country has disclosed exact casualty figures since the war began, but CSIS estimates Russian casualties at approximately 1.2 million and Ukrainian casualties at approximately 600,000.

Fighting continues as Ukraine, Russia, and the U.S. have failed to reach an agreement in ceasefire negotiations. According to the UN Human Rights Monitoring Mission in Ukraine (HRMMU), Russian forces have recently been executing Ukrainian prisoners of war, while Ukrainian forces have also been engaging in torture and abuse of Russian prisoners—rendering the Geneva Convention's requirement for humane treatment of POWs effectively meaningless.

Ukrainian civilians in particular continue to endure extremely difficult lives. Since October last year, Russian forces have concentrated attacks on Ukraine's energy infrastructure, cutting off electricity, heating, and water supply nationwide.

The lives of displaced persons and refugees who have lost their homes are becoming increasingly dire. According to the Norwegian Refugee Council (NRC), there are 3.712 million internally displaced persons within Ukraine and 5.349 million refugees who have fled to Europe—71% of whom have been displaced for more than two years.

Doo Jin-ho, director of the Eurasia Research Center at the Korea Institute for National Strategy, said, "Considering Russian-occupied territories and civilian-restricted areas, actual civilian casualties are likely greater than official statistics. More than 20% of Ukraine's population has fled abroad or to other regions domestically, and vulnerable populations including the elderly..."