For Beijing, the Supreme Court’s Tariff Decision Changes Little

0:00For Beijing, the Supreme Court's tariff decision changes little. Commentary. The Supreme Court's decision against much of President Donald Trump's existing tariff agenda has caused quite a stir in American political and media circles. It certainly has angered the president. There is, however, likely little celebration in Beijing. Beijing knows that the administration has many options to maintain trade pressure in pursuit of trade arrangements more advantageous to the United States. For the folks in Songnanhai, the U.S. Supreme Court has changed little, and the Chinese Communist Party will doubtless proceed on that basis. For all the angst on one side of American politics and cheering on the other, the Court's decision, practically speaking, is remarkably narrow in scope. The Court, quite simply, decided that the International Emergency Economic Powers Act does not, as the White House has claimed, give the president power to impose and modify a wide range of tariffs. The Court's decision affects neither the tariffs imposed by this White House

1:01under other auspices nor the trade deals that the administration has closed in the past few months. Neither does the decision stop the administration from pursuing its trade agenda by other means. The easiest alternative for the White House now is Section 122 of the Trade Act of 1974. It authorizes the president to impose tariffs of up to 15% on any nation maintaining large trade surpluses with the United States, as well as volume limits on foreign goods entering the country. China certainly qualifies under this criterion. The president can maintain these tariffs for up to 150 days without reference to Congress, after which he would need congressional approval to extend them. Section 301 of the same act allows the White House expansive powers to address what it determines our unfair trade practices. This authorization, however, demands a thorough investigation before the White House can act, though it should be clear that the administration would have little trouble making such a case against China. Both the Biden and Trump administrations

2:01have supported such claims in various ways over several years. Alternatively, Trump could turn to Section 232 of the Trade Expansion Act of 1962. It would allow more permanent tariffs than Section 122 of the 1974 law, but like Section 301 of that law, it would require a thorough investigation. Trump's 2018 and 2019 tariffs on Chinese imports conducted such an investigation and used this authorization. The White House also has at its disposal section 338 of the Terrif Act of 1930. This was the legislation that authorized the infamous Smooth Holly tariffs, which some contend deepened and extended the Great Depression. This legislation authorizes the president to impose tariffs of up to 50% on imports from countries that the White House concludes have discriminated against US businesses. No investigation is required, and there are no limits to how long the tariffs can remain in place. Treasury Secretary Scott Bessent has indicated that the

3:02administration is considering the powerful authorization of this alternative. Well aware of this array of options open to the Trump White House, it is easy to see why Beijing doubtless feels little relief from the Supreme Court's very limited finding, no matter how many headlines it has generated on this side of the Pacific. Even without drawing on the legislation Bessent has pointed to, Trump could reinstate tariffs under Section 122 to buy time for an investigation under Section 301 or Section 232 of the 1962 law. Complications under these alternatives might offer hope to other American trading partners, but Beijing knows it is the Trump White House's primary target and would enjoy tariff relief for only the shortest of times. If at all, if S has been mooted, a summit between Trump and Chinese leader Xi Jinping takes place, either side will come with much the same trade armaments as before the Supreme Court decision. Trump can, and no doubt will if the meeting takes place, threaten more severe tariffs and other trade restraints. She will threaten

4:03to take action over China's near monopoly on technologically essential rare earth elements. To be sure, the United States has launched an ambitious plan to erase China's near monopoly on such critical materials, but that will take time. Those plans will not bear fruit before the proposed summit comes off. She will then retain this bargaining chip, one that has exacted concessions from Trump twice in the past year. Given such a prelude, the summit should it actually take place, will, aside from the usual happy talk of diplomacy, likely change little, just as the Supreme Court decision changes little in the contest between the United States and China.