Editorial | China now holds more cards ahead of Xi-Trump meeting

The United States Supreme Court, which dealt a serious blow to US President Donald Trump’s tariff-based trade policy, may have helped to steady the rocky trade ties between China and the United States ahead of a crucial summit meeting. In a stunning decision that cut across ideological blocs, six out of the nine justices ruled that Trump lacked the authority to impose the emergency tariffs he did last year on nearly all imports into the US, including the so-called reciprocal duties on dozens of countries and additional levies tied to the fentanyl crisis.

A defiant Trump immediately declared a 10 per cent tariff on all imports under a different law. The next day he said the tariff rate would be raised to 15 per cent. This ends up benefiting countries previously subject to higher tariffs, including China. Mainland and Hong Kong exporters now face a 15 per cent tariff, rather than the reciprocal and/or fentanyl-related levies totalling 20 per cent.

The US trade policy reversals look to have strengthened Beijing’s hand. At the very least, it has the effect of steadying rather than escalating tensions with President Xi Jinping scheduled to meet Trump in Beijing when he visits from end-March. US Trade Representative Jamieson Greer sounded a conciliatory note, saying the meeting “is not to fight about trade”, but “to maintain stability”.

Taiwan is one of the most adversely affected. After the top court’s decision, Trump, with no obvious reason, again lashed out at the island for undermining the US semiconductor industry. This was despite a deal reached in January, with Taiwan having pledged to invest heavily in the US, totalling around US$500 billion, especially in the chip industry. While the island still faces a 15 per cent tariff, it’s unclear where Washington’s previous promise of zero duties on generic drugs, their ingredients, aircraft components and some natural resources now stands.