The ideological centerpiece of President Donald Trump’s second-term trade doctrine has been struck down by the Supreme Court — a legal setback that has dramatically shifted the balance of power in the US-China rivalry just weeks before their two leaders are scheduled to meet in Beijing.
Within hours of the ruling, the Trump administration pivoted, activating Section 122 of the Trade Act of 1974 to impose a temporary 15% tariff on top of existing ones, citing balance-of-payments concerns. The maneuver is legally narrower and time-bound. Trump’s trade war is not over — its legal battlefield has merely shifted.
For China, the ruling delivers an unexpected reprieve, easing pressure on Chinese exporters and recalibrating the leverage dynamics ahead of Trump’s planned April visit. Chinese celebration, however, would be premature.
The earlier Section 301 tariffs, anchored in separate statutory authority, remain intact. But the strategic psychology has changed, and in high-stakes trade diplomacy, perceived constraints shape bargaining power as much as actual economic weight.
A weaker Trump
The ruling’s timing could not be more delicate. Trump was poised to seek concessions from President Xi Jinping on agricultural purchases, energy imports and industrial subsidies. The administration originally intended to wield the now-illegal International Emergency Economic Powers Act (IEEPA) tariffs as its primary instrument of coercion.
That leverage has now weakened considerably. Beijing recognizes that Trump operates within constitutional constraints and that any sweeping new tariff threat will almost certainly invite protracted litigation, including Supreme Court challenges.
Trump retains the 15% emergency surcharge under Section 122, but it is capped and limited to 150 days, meaning its coercive capacity is significantly narrower than the one it replaced.
The diplomatic choreography in April may therefore entirely invert expectations. Rather than facing an American ultimatum, China could approach the table with greater confidence, calculating that Washington’s threats are legally encumbered.
Trump was expected to arrive as an enforcer. Instead, he will enter Beijing defeated and constrained, his signature pressure tool undercut by the US judiciary.
The meeting is now highly unlikely to produce a capitulatory deal from China, raising questions of whether Trump will still make the trip.
Xi is more likely to extend selective concessions calibrated for domestic American consumption — incremental agricultural purchases, perhaps symbolic energy contracts — while firmly preserving contested industrial subsidies that make Chinese exports cheap in global markets.
Beijing will likely offer just enough to stabilize the relationship while conceding nothing that weakens its long-term industrial positioning.
Beijing’s strategic windfall
By invalidating the IEEPA-based tariffs, the Court effectively dismantled the punitive trade barriers that had weighed heavily on China’s manufacturing sector throughout 2025. The consequences will extend well beyond immediate tariff relief.
First, Beijing gains a significant reputational advantage. It can now project itself as a defender of global trade stability while Washington appears mired in discord. In an era when credibility shapes capital flows, China will frame the episode as evidence that its policy continuity stands in sharp contrast to American institutional turbulence.
Second, the prospect of large-scale tariff refunds — potentially amounting to trillions of yuan — could inject fresh liquidity into China’s slowing domestic economy. For exporters who endured months of compressed margins and deferred shipments, reimbursement will not be just restitution; it will be balance-sheet relief that can circulate back into industrial upgrading and supply chain consolidation.
The deeper strategic windfall, however, lies in China’s command over critical mineral supply chains. While Trump was preoccupied with legal battles at home, Beijing continued to entrench its dominance across battery ecosystems and green energy components.
Critical minerals — lithium processing, rare earth refining, graphite anodes — are no longer merely commodities; they are geopolitical instruments that give China coercive power. The collapse of Trump’s “Liberation Day” tariff regime broadens China’s room for maneuver across all of them.
Next phase tech war
At the same time, the two sides’ tech war is unlikely to soften and poised to intensify.
Deprived of unilateral emergency tariff powers, Trump can be expected to pivot toward more calibrated non-tariff tools, including tighter semiconductor export controls, expanded entity listings and more surgical investment restrictions. These mechanisms are slower to deploy but potentially more structural in impact.
Beijing has anticipated this trajectory. The annulment of the tariffs buys time to accelerate semiconductor localization, deepen domestic lithography research and fortify industrial policy before Washington constructs a firmer statutory foundation for renewed economic containment.
The technology war will thus likely intensify, targeting the core architecture of digital sovereignty as the race for artificial intelligence supremacy intensifies.
Trump’s doctrine of maximum pressure has been undercut by the Supreme Court, but, judging by his rhetoric and actions since, his commitment to trade coercion is intact. Beijing, meanwhile, is positioned to capitalize, consolidating its image as the steadier economic pole in an increasingly fragmented global geoeconomic order.
Ronny P. Sasmita is a senior international affairs analyst at the Indonesia Strategic and Economics Action Institution, a Jakarta-based think tank.
