China Benefits from US Tariff Ruling

The Supreme Court's 6-3 decision in *Learning Resources, Inc. v. Trump* found that the president does not have the authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Chief Justice John Roberts, writing for the majority, argued that the power to levy taxes and duties rests with Congress and such a significant power was not explicitly delegated in the IEEPA. This ruling immediately invalidates several key tariffs, including a 10 percent duty related to fentanyl trafficking and another 10 percent "reciprocal" tariff on Chinese goods. The escalating tariff on Chinese goods, which had reached an effective rate of 145%, was also struck down. However, the decision does not eliminate all tariffs on Chinese products. Duties imposed under other legal authorities, such as the Section 301 tariffs from the initial trade war beginning in 2018 and Section 232 national security tariffs on steel and aluminum, are unaffected by the ruling. As a direct result of the invalidated IEEPA tariffs, the effective tariff rate on Chinese imports was expected to drop by as much as seven percentage points. This provides Beijing with more leverage and alters the bargaining space ahead of diplomatic talks. The Trump administration immediately responded by invoking a rarely used provision, Section 122 of the Trade Act of 1974. This allows the president to impose a temporary import surcharge of up to 15% for 150 days to address a balance-of-payments deficit. The U.S.-China trade war began in 2018 when former President Trump initiated tariffs to combat what the U.S. deemed unfair trade practices and intellectual property theft. The Biden administration maintained these tariffs