STEVE INSKEEP, HOST:
The Trump administration says it expects countries to, quote, "stand by" trade deals that they signed with President Trump. That's after the U.S. Supreme Court ruled that Trump's Liberation Day tariffs were illegal. Many countries made concessions to the United States to avoid those tariffs. And the concessions are still there, but the tariffs have vanished. So what do you do?
The president has replaced those tariffs with a global 15% tariff, claiming authority under a different law. In a few minutes, a former U.S. trade representative games out the new circumstances. We begin with reaction in China.
LEILA FADEL, HOST:
NPR's China correspondent, Jennifer Pak, is in Shanghai and joins me now. Good morning, Jennifer.
JENNIFER PAK, BYLINE: Good morning.
FADEL: So what's been the reaction in China to the Supreme Court's ruling and Trump's new 15% tariffs?
PAK: So this morning, China's Ministry of Commerce issued a statement saying it's making a full assessment of the ruling. It's also urged Washington to lift unilateral tariffs on its trading partners. Now, that's the official view. On the ground, Chinese business owners who deal with the U.S. are cautiously optimistic, I'd say, about this development. I spoke to a shoe manufacturer based in Southern China in Guangdong Province. James Gau owns this company called SHOEBOT, and he says Friday's news sounds positive, but...
JAMES GAU: From my side, I don't really know what this change exactly means.
PAK: Because, he says, it all comes down to how it's enforced, and what's next? Like, when he loads his shoes on a ship today, will it be the same tariff rate when it arrives in the U.S? You know, this past year has just been a roller coaster ride with tariffs.
FADEL: Wow. I mean, obviously, a real concern that it could change just on that journey. At one point last year, the tariffs and counter tariffs from both sides were over 100%. How are Chinese businesses you've been speaking to coping with the decision making from Washington?
PAK: Well, they've been living with uncertainty for quite a while since Trump's first term when he launched a trade war with China in 2018. So Chinese manufacturers that are still standing, they've built this uncertainty into their business model by looking for ways to hedge the tariffs. So take that shoe manufacturer you heard from earlier, James Gau. He's expanded his manufacturing to Vietnam, where the U.S. tariff rate is lower there than the ones placed on China.
So right now, most of his athletic shoes destined for the U.S. are made in Vietnam, but that hasn't meant that he cuts China out of his operations.
GAU: China's the best place for innovation on all these...
PAK: He says, for more specialized shoes, he still uses his factory in China because they have the high-end machinery and technical know-how here. China is still the place to manufacture high quality stuff. And on the government level, Beijing has been trying to diversify its trading partners, and they've been doing it for some years now. In other words, they're trying to be less reliant on trade with the U.S. - and they've had some success.
FADEL: OK. So now President Trump is about to head to China in a few weeks. How might this Supreme Court ruling influence the trip?
PAK: Before the Supreme Court's decision, both the U.S. and China put a brief pause on some trade restrictions and the higher tariffs on each other's exports. Now, President Trump has used tariffs against China as a threat to lower the trade deficit, to stop intellectual property theft, to stop the flow of chemicals used to make street fentanyl. So, in theory, this decision on Friday by the Supreme Court might weaken Trump's hand.
However, China also has its own issues. Its domestic economy is sluggish, consumption has been weak. Which is why some Chinese manufacturers have been selling more to other countries. And now some of those countries, they're starting to push back on cheap Chinese exports, saying that those exports are destroying their local industries. So China really needs the relationship with the U.S. to stabilize.
And like the Chinese Commerce Ministry has said, when the U.S. and China fight, both sides hurt.
FADEL: That's NPR's Jennifer Pak in Shanghai. Thank you so much for your reporting.
PAK: Thanks for having me. Transcript provided by NPR, Copyright NPR.
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