Yuyuantantian: After the U.S. Supreme Court ruling, tariffs imposed on China under IEEPA should be automatically canceled

Yuyuantantian published an article pointing out that since February last year, the new tariffs imposed on China by the U.S. under IEEPA mainly consist of two parts. The first is the so-called 'fentanyl tariff,' currently set at a 10% rate for China. The second is the so-called 'reciprocal tariff,' with a 10% rate currently applied to China, while the remaining 24% rate is temporarily suspended. According to the U.S. executive order, these tariffs implemented under the U.S. International Emergency Economic Powers Act (IEEPA) are to be 'terminated as soon as possible.' Following the U.S. Supreme Court ruling, it implies that the executive order issued by the U.S. based on the Supreme Court's decision to cancel IEEPA tariffs also applies to the relevant parts of the U.S.-China tariff arrangements, meaning IEEPA tariffs on China should be automatically canceled. The latest so-called 'temporary tariffs' imposed by the U.S. are based on Section 122 of the long-unused Trade Act of 1974, citing the reason of 'fundamentally addressing the imbalance in the U.S. international balance of payments,' particularly the issue of the U.S.'s significant trade deficit. However, the prerequisite for applying Section 122 is that the U.S. international balance of payments faces fundamental problems. Legally, the judgment criteria for this are not solely based on the goods trade deficit but include the overall international balance of payments, encompassing capital flows, goods, and services trade. From this perspective, once this tariff takes effect, it is likely to face legal challenges, as has happened previously. Cui Fan, an expert familiar with international trade negotiations, stated that if the U.S. stops the relevant measures or lowers the tariff rates, China does not rule out the possibility of evaluating and adjusting based on actual changes. However, if the U.S. continues to impose new tariffs using other legal tools, China will also assess whether to take corresponding measures.