CITIC SEC has released a research report stating that the US Supreme Court's ruling declaring tariffs imposed by former President Trump under the International Emergency Economic Powers Act (IEEPA) as illegal may lead to renewed periodic uncertainty in global tariff expectations. The Trump administration's attempt to find equivalent substitutes could disrupt previously stabilized trade outlooks.
For China, influenced by the stability of the "truce period" and Trump's potential visit to China, the overall US tariff level on Chinese goods is expected to decline. At least during the low-tariff window, China’s labor-intensive exports may benefit relatively.
Looking ahead over the coming months, tariff negotiations between the US and various economies may introduce multiple expectation shocks, particularly ahead of a potential Trump visit to China.
On February 21, the US Supreme Court ruled that IEEPA does not authorize the president to impose broad tariffs. Chief Justice Roberts stated that the government’s interpretation of IEEPA as granting unilateral and unlimited tariff-setting power exceeded statutory authorization. The ruling emphasized the "major questions doctrine," requiring clear congressional authorization for economically significant policies.
Despite Trump having alternative mechanisms to advance his tariff agenda, global financial markets reacted positively but cautiously. The S&P 500 rose 0.69% on the day of the ruling, while the US dollar index fell 0.09% and the 10-year Treasury yield rose 0.33%. European equities also responded favorably.
CITIC SEC expects the Trump administration to explore multiple tariff alternatives while maintaining existing trade agreements. Following the implementation of Section 122 tariffs, Section 301 investigations may become key. However, due to legal constraints, congressional oversight, and midterm election pressures, fully replicating the previous tariff structure may prove difficult.
Trump’s potential tariff alternatives fall into three categories:
First, Section 122 tariffs address balance-of-payments issues, apply broadly, and can be implemented quickly. However, they are capped at 15%, limited to 150 days, and cannot target specific economies. Trump raised these tariffs to 15% on February 21. Extending them beyond July 24 would require new legislation, suggesting a need for alternative mechanisms afterward.
Second, Section 301 tariffs target alleged unfair trade practices and can be applied to specific countries or sectors. A new round of Section 301 investigations was launched on February 20, covering major trade partners. For economies with prior Section 301 cases (e.g., China, Brazil, Vietnam, India, the UK, and the EU), new tariffs could take effect within months, potentially aligning with the expiration of Section 122 tariffs. Others may face a longer timeline.
Third, Section 232 tariffs address national security concerns, targeting specific industries rather than countries, with longer investigation periods. Many announced Section 232 tariffs have been delayed, indicating implementation challenges, so they may not be a primary tool in the near term.
Other mechanisms, such as Sections 201 and 338 tariffs, require International Trade Commission investigations and are less likely to be prioritized.
Overall, while the Trump administration may pursue multiple tariff alternatives, congressional and electoral constraints may limit their scope. Public opinion polls show 69% of US voters believe tariffs raise prices, and 74% oppose further tariff increases.
For China, the "truce" stability and Trump’s planned visit suggest a potential reduction in overall US tariffs. If the 15% Section 122 tariff is applied, the average US tariff on Chinese goods could fall by about 5%, benefiting Chinese exports this year. Labor-intensive sectors such as toys, footwear, furniture, luggage, and apparel—which have high overseas revenue exposure and significant US export share—may see short-term gains.
Regarding tariff refunds, lower courts will determine the process, which may take years. Refunds will go to importers, not consumers. Based on historical cases like US v. US Shoe Corp, refunds may begin around mid-2026 to 2027, with the process lasting several years. IEEPA tariff collections totaled $133.5 billion as of December 2025, with estimates reaching $160 billion by February 2026. Historical refund rates have varied, such as 60% in the US Shoe Corp case and 80% in the US-Canada softwood lumber dispute.
In the coming months, US tariff negotiations with various economies may create expectation volatility, especially ahead of a potential Trump visit to China. If the visit occurs, US manufacturing investment in China may be a key topic, though reduced US investment barriers and policy stability would be necessary. Other issues may include trade balances, technology sanctions, and geopolitical matters.
The Supreme Court’s ruling significantly weakens Trump’s negotiating leverage. Whether he adopts a strategy of "creating new bargaining chips" in February–March will be critical for market expectations.
Globally, many economies expect existing tariff frameworks to persist. The US may reinforce current agreements and institutional arrangements while using tariffs, investment screenings, export controls, or delayed market access to pressure economies with unresolved disputes.