China has warned of possible retaliation after US President Donald Trump signaled new Section 301 investigations that could target Chinese strategic industries, including electric‑vehicle (EV) batteries, rare earths and advanced artificial‑intelligence chips.
The US Supreme Court on February 20 ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose such duties. Beijing has urged Washington to scrap unilateral tariffs.
Responding to the decision, a spokesperson for China’s Ministry of Commerce said Monday that Beijing has consistently opposed unilateral tariff increases and reiterated its long-standing view that trade wars produce no winners.
“We are conducting a comprehensive assessment of the Supreme Court ruling,” the spokesperson said. “The unilateral measures taken by the US, including the reciprocal tariffs and fentanyl-related tariffs, not only violate international trade and economic rules but also contravene US domestic law, and they do not serve the interests of any party.”
“We have also noted that the US is preparing to adopt alternative measures, such as trade investigations, in an attempt to maintain tariffs on its trading partners. China will closely monitor these developments and firmly safeguard its legitimate rights and interests,” he added.
The spokesperson stressed that cooperation between China and the US benefits both sides while confrontation harms both.
The comments came after the US Supreme Court on February 20 ruled that IEEPA does not authorize the president to impose tariffs. On the so-called Liberation Day last April, Trump invoked the act to levy 10% to 50% “reciprocal” tariffs on major economies. At one point, duties on Chinese goods were raised to 145%, prompting Beijing to retaliate with tariffs of up to 125% on US imports.
The two sides later reached a temporary truce under which Washington reduced its reciprocal tariff to 10% but kept a 10% duty linked to the fentanyl issue. Even so, apart from this 20% IEEPA-based tariff, Chinese exporters have faced average US tariffs of around 25% since the previous trade war began in 2018.
Following the court’s ruling on February 20, Trump signed an executive order to impose a new tempoarary 10% tariff on all countries for 150 days by invoking section 122 of the Trade Act of 1974, which allows the president to impose temporary surcharges or import restrictions to address balance-of-payments concerns. On February 22, he said the global tariff rate would be increased to 15%.
Trump also directed officials to launch new Section 301 investigations under separate legal authorities that could pave the way for new tariffs.
He said all IEEPA-related tariffs will be canceled from Tuesday. But courts will decide in the coming years whether previously paid tariffs, about US$130 billion, will be refunded. Trump is set to visit Beijing in early April to meet with Chinese President Xi Jinping.
In the short run, Chinese exporters will enjoy a 5% reduction in duties, as the 20% IEEPA-based tariffs on China will be replaced by a 15% temporary tariff.
Chinese commentators initially welcomed the US Supreme Court ruling as a symbolic victory, viewing it as a rare institutional constraint on Washington’s tariff authority. However, the optimistic mood quickly shifted as analysts realized that the US government retains multiple legal and investigative mechanisms to pursue new trade restrictions.
“The so‑called ‘temporary tariffs’ recently imposed by the US cite Section 122 of the Trade Act of 1974, a provision rarely used in recent decades, on the grounds of addressing fundamental international balance‑of‑payments problems, particularly the US trade deficit,” says Yuyuan Tantian, a social media account affiliated with China Central Television.
“However, the legal threshold for invoking Section 122 is a fundamental imbalance in overall international payments, including capital flows, trade in services, and goods. From this perspective, the new tariffs could face legal challenges again,” she writes.
“If the US lowers tariff rates, China may assess the situation and make adjustments accordingly,” says Cui Fan, a professor at the School of International Trade and Economics at the University of International Business and Economics. “But if the US uses other legal tools to impose new tariffs, China will also evaluate whether to take corresponding countermeasures.”
Three legal tools
A Shandong-based columnist writes in his “Global Watch” commentary that the Trump administration still has at least three legal pathways to impose new tariffs:
• Section 122 of the Trade Act of 1974 — Designed to quickly fill the policy vacuum created by the IEEPA ruling, this measure allows Washington to move rapidly and create a new tariff baseline, signaling to markets and trading partners that US tariff barriers remain in place.
• Section 232 of the Trade Expansion Act of 1962 — This law allows the president to restrict imports on national security grounds, including through tariffs. It was widely used during Trump’s first term and again after his return to office to target products such as steel and aluminum. US courts have historically granted the president broad discretion under this provision, making legal challenges more difficult.
• Section 301 of the Trade Act of 1974 — This mechanism authorizes the Office of the US Trade Representative (USTR) to investigate what Washington considers unfair trade practices and impose retaliatory tariffs without congressional approval, giving the administration strong unilateral authority.
“The scope of Section 232 investigations is expected to expand significantly in 2026, targeting strategic sectors such as electric-vehicle (EV) batteries, rare earths and advanced artificial-intelligence chips that are closely tied to national security and future industrial competition,” the writer says. “By framing tariffs under national-security justifications, the administration is trying to build a more durable legal foundation for long-term duties that will be harder to challenge.”
He says US allies such as the EU, Japan and South Korea are increasingly using similar unilateral trade tools, warning that the EU’s probe into Chinese EVs signals a potential tit‑for‑tat global tariff cycle.
Cross‑border compliance expert Wang Lei advised companies in China to adopt a “three‑step strategy”:
- Immediately compile proof of duties paid since 2018 and register refund accounts with US Customs and Border Protection;
- closely monitor class‑action cases expected to be heard by the US Court of International Trade; and
- adjust supply chains by shifting part of production to Southeast Asia to avoid potential new tariffs.
Beyond China, several Asian exporters are also expected to benefit from the new 15% temporary tariff rate. Exporters in Malaysia, Cambodia, Pakistan, Indonesia and Thailand had previously faced tariffs of around 19%, while those in Vietnam and Bangladesh paid 20% and India paid 25%.
Some observers said that if the US is set to launch more Section 301 probes against China, more Chinese firms will have to relocate their production facilities to other Asian countries.
Moving out of China
At a February 20 press briefing, Trump said the court decision had removed tariff uncertainty. He described the companies that filed the lawsuit as “China‑centric.”
“We’ve taken the uncertainty of tariffs out. Because we had uncertainty. We got sued by sleazebags that are very outside‑country, China‑centric. And they’re going to end up not doing as well as they did before,” he said, referring to the plaintiffs who filed a lawsuit last year to challenge the IEEPA tariffs.
Court documents show that one of the plaintiffs was Learning Resources Inc, a Chicago‑based toy manufacturer.
The company’s owner, Rick Woldenberg, told the media that most of his educational toys are imported from China and that his company paid about US$10 million in duties last year. His sister company, Hand2Mind, produces educational products including Alphabet Coffee Cups and Numberblocks learning materials for children.
He said his campaign aimed to show how difficult reshoring would be, arguing that moving an entire supply chain out of China quickly would be extremely costly and could take months or years to replicate elsewhere.
However, he told the Wall Street Journal that his companies have already relocated much of their production from China to countries such as Vietnam and India. Despite a 20% drop in revenue and net profit in 2025, he said his businesses are hiring people in Chicago this year.
In other words, Woldenberg was saying he had effectively done what Trump has urged American firms to do: shift production out of China, absorb tariffs and resume hiring in the US.
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