Good news: U.S. tariffs on China may be reduced by another 10%
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Recently, The U.S. Trade Court is launching a judicial review of the Trump administration’s latest round of tariff policies. The core dispute points to a fundamental issue: whether the trade deficit constitutes a legal basis for imposing tariffs.
According to Xinhua News Agency, in February this year, the Supreme Court overturned Trump’s 2025 tariffs imposed under the International Emergency Economic Powers Act (IEEPA) with a 6-3 ruling. The government immediately invoked Section 122 of the Trade Act of 1974 and announced the imposition of a new round of 10% tariffs within hours of the Supreme Court’s ruling.
On April 10, a three-judge panel of the U.S. Court of International Trade held a three-hour court debate on the 10% comprehensive import tariff order signed by Trump in February.
The judges sharply questioned the legal basis cited by the government, suggesting that the trade deficit and the "balance of payments deficit" stipulated in the law are not the same concept, and that the government's legal arguments contained major loopholes.
This trial was jointly filed by 24 states dominated by the Democratic Party and many small businesses. If the government loses the case, it will not only invalidate these tariffs, but may also force the federal government to refund the taxes that have been collected.
The lawsuit is the latest round of legal challenges to Trump's tariff policies. Trade lawyer Timothy C. Brightbill said before the trial that the court was expected to be "skeptical" of Trump's authority to impose broad tariffs.
Combining the trend of court trials and past cases,The market generally predicts that the 10% global tariff is highly likely to be judged illegal and forcibly cancelled. If implemented, the US tariffs on China will be reduced by another 10%.
At present, all tariffs imposed by Trump on China under IEEPA have been cancelled. The current tariffs on China consist of three parts:
1. Section 122 global 10% tariff (including China, the core of this lawsuit, which is likely to be cancelled);
2. Section 301 tariff (effective, high tax rate for specific products);
3. Section 232 tariffs (effective, focusing on high tax rates in specific areas).
The outcome of this case has significant implications. According to the New York Times, after the Supreme Court ruled in February to overturn the IEEPA tariffs, it has triggered a wave of companies seeking to pursue illegal tariffs of approximately US6 billion levied by the government. If this 10% tariff is also ruled illegal, the government will face a new round of tax refund pressure.
The plaintiffs are also wary of Trump's potential strategies to circumvent legal restrictions. Marshall warned that if the government kept the tariffs in effect by continuously invoking different legal provisions, it would form a de facto permanent tariff regime - "If we are faced with a series of continuous tariffs and there are always tariffs, that will be a problem."
White House spokesman Kush Desai said in a statement that the president was "lawfully exercising the executive power granted by the Constitution" and the government will "firmly defend the legality of the president's actions."
The collegial panel did not disclose a timetable for its decision at the end of the hearing. Trade lawyer Brightbill predicted the legal process could take months to reach a full ruling.By then, the Trump administration had begun promoting alternative tariff plans.
