Gavin Bade

The U.S.

and China are supposedly in a trade truce right now after a meeting last October between President Trump and Xi Jinping where they agreed to keep the trade war to a dull roar for the next few months in anticipation of a leaders' summit this spring.

One would assume if the Trump administration increases tariffs on China by 25%, that could put that summit at risk coming this spring.

The other question is about what legal authority would underpin this tariff threat.

Typically, when Trump has threatened tariffs like this before, he has used the emergency powers under a law called IEPA, the International Emergency Economic Powers Act.

The catch here is that the Supreme Court is about to rule whether Trump's use of IEPA is legal or not.

That could happen as soon as Wednesday.

So you could see him issuing or threatening these tariffs under IEPA and then the Supreme Court coming back literally a day later and saying you're not allowed to do that.

They're putting the offer out there to other nations to say, if you do a deal with us, we can carve out more of these tariffs as well.

Yeah, so this is a subtle but important shift in the Trump administration's reciprocal tariffs.

These are the ones that he unveiled on Liberation Day back in April, then paused, then there were a bunch of negotiations.

He put them back in place in early August, right?

And so what he's done in the last few weeks here is he has increased the exemptions or the carve-outs from these tariffs for a few dozen products.

They've also given indications that they're going to do more in the future.

There was an executive order in September where Trump said, not only am I exempting more products from these tariffs, but I'm going to lay out an entire list of hundreds of products that I'm going to say are available for exemptions if we make a trade deal with another country.

They're putting the offer out there to other nations to say, if you do a deal with us, we can carve out more of these tariffs as well.

There's a few reasons for this.

One of them is the reciprocal tariffs are under legal threat.

This is based on a very novel interpretation of emergency national security law.

The Supreme Court is going to hear a case on this early next month.