RPT-BREAKINGVIEWS-Tariffs reset weakens Trump’s hand in China talks

By Hudson Lockett

HONG KONG, Feb 23 (Reuters Breakingviews) - Going toe-to-toe with an autocrat can be hard if you're only pretending at omnipotence. That is the lesson Donald Trump must keep in mind now that the Supreme Court has struck down most of the U.S. president's tariffs on imports from China, whose leader Xi Jinping now looks all the more savvy for playing hardball in trade talks over the past year. Both sides understand that the American leader has a weaker hand heading into an in-person meeting in Beijing next month, even if he still has plenty of levers left to pull in his battle against U.S. consumers' love for low-cost Chinese goods.

Analysts at Citigroup estimate that once Trump's global levies of 15% announced on Saturday are taken into account, the court's ruling drags effective tariffs on Chinese exports down about 5 percentage points to 26%. That is their lowest level since he made the first of his second-term hikes to China tariffs on February 2, 2025. Worse still for Trump, the replacement Section 122 tariffs that stopped those levies from dropping all the way to 11% only last for 150 days. That may encourage Chinese negotiators to hold back from making any firm commitments at an upcoming summit between the two superpowers' leaders, currently planned for March 31 to April 2.

Trump still has a few cards to play: investigations into alleged unfair trade practices by China already underway could boost the potency of so-called Section 301 tariffs that can replace stopgap levies. That may help at the margins when attempting to hammer out a favourable arrangement which safeguards the flow of Chinese rare earths to American manufacturers in exchange for Chinese access to U.S. semiconductors.

But the White House has lost the 'anytime, anywhere' tariffs threat it previously deployed at whim, not only against China but also any allies dealing with America's chief geopolitical rival. Trump's vow last month to slap 100% blanket levies on Canada if it goes ahead with a preliminary China trade deal, for instance, now amounts to a damp squib. Future attempts to press-gang other trading partners like the European Union into an unwieldy trade alliance against Beijing likewise look more difficult, as do sudden punitive hikes against re-exporters of Chinese goods like Vietnam.

Beijing's advantages, meanwhile, remain robust. The odds of the Supreme People's Court of the People's Republic of China scotching current levies on U.S. goods are effectively nil. Chinese exporters have successfully reoriented to other developed and emerging markets over the past year, driven by bipartisan hostility in Washington: China ended 2025 with a record $1.2 trillion trade surplus. And Xi's decade-plus drive to centralise state power has put him in a commanding position relative to the newly humbled American leader. Assuming, of course, that the much-anticipated meeting isn't cancelled.

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CONTEXT NEWS

U.S. President Donald Trump will travel to China from March 31 to April 2 for a summit with Chinese President Xi Jinping, a White House official confirmed on February 20.

Later on the same day, the U.S. Supreme Court struck down a wide swathe of tariffs applied to imports from China and other countries.

Analysts at Citigroup estimate the ruling will drag down effective U.S. tariffs on Chinese exports by about 5 percentage points to 26%, taking levies to their lowest level since Trump kicked off a series of hikes targeting the country's goods in February 2025.