On April 9, 2025, the US government unilaterally increased the tariff rate on Chinese goods imported to the US to 125%, while suspending the original 10% tariff on similar goods from other countries. This policy seriously violates WTO rules and has caused severe turbulence in China US economic and trade relations. This article analyzes the impact and response path of US tariff policies from the perspectives of legal compliance and corporate practice.

1、 Doubts about the Legitimacy of Extreme Tariff Policies in the United States

The legal basis cited by the Trump administration for the recent escalation of US tariff policies towards China is mainly the International Emergency Economic Powers Act (IEEPA) and Section 232 of the 1962 Trade Expansion Act, which combine existing 301 tariffs to form the final tax rate. This policy combination utilizes the president's emergency powers and legal tools from previous trade wars, and its legitimacy and rationality have been widely questioned by the international community and the United States.

At the international legal level, Trump's measure of imposing a 125% tariff on Chinese products violates multiple core provisions of the WTO, particularly trade rules such as most favored nation treatment, tariff transparency and predictability, and prohibition of unfair trade restrictions. Although the United States attempted to invoke the "National Security Exception" clause of Article 21 of GATT, it failed to provide substantial evidence of Chinese goods threatening US security, nor did it explain why goods from other countries are exempt from security risks. Therefore, the discriminatory tariffs imposed by the United States do not meet the conditions for the application of the "national security exception" clause in Article 21 of GATT.

In the United States, the Trump administration has been accused of abusing the concept of "national security" by citing the IEEPA's imposition of tariffs on fentanyl. Gregory Meeks, a member of the U.S. House Foreign Affairs Committee, criticized this move as a unilateral action that "bypasses Congress" and lacks a rational basis, politicizing ordinary trade issues. In addition, the non-profit organization New Civil Liberties Alliance (NCLA) in the United States has also sued the Trump administration in the Federal Court for the Northern District of Florida, accusing it of abusing IEEPA to raise tariffs, resulting in a sharp increase in costs, and infringing on the taxing power granted to Congress by the Constitution. If such lawsuits are successful, it may lead to the United States redefining the scope of the President's trade powers, adjusting or even revoking excessive tariff policies.

2、 The potential impact and development trend of extreme tariff policies

1.The decline in market share of Chinese products in the United States will not promote the development of domestic industries in the United States

Trump's tariff policy limits the trade war to the bilateral scope between China and the United States, which can prevent Chinese products from directly entering the United States in the short term, but cannot achieve the goal of promoting domestic industrial development in the United States. Taking the United States' anti-dumping and anti subsidy measures against China as an example, after the US Department of Commerce launched anti-dumping investigations on various Chinese products, most of the Chinese products in the US market were quickly replaced by products from third countries such as Vietnam, India, and Mexico. Subsequently, Chinese companies will gradually transfer their production capacity to third countries and export to the United States after local production. Therefore, Trump's discriminatory tariff policy will only increase the export costs of Chinese companies and the procurement costs of American users, but will not promote the development of domestic industries in the United States.

2. For Chinese goods that cannot be replaced, excessively high tariffs may stimulate grey trade

The 125% tariff imposed by the Trump administration on Chinese products will stimulate smuggling and false origin declarations. For Chinese products such as rare earth elements and pharmaceutical raw materials that are difficult to replace, they play a critical role in the US supply chain and are difficult to obtain alternative supplies from the US or other countries in the short term. In this case, high tariffs may stimulate a surge in smuggling and false origin behavior. For example, using small ships or cross-border transportation to bypass formal customs inspections, or transiting through third countries, Chinese goods are first shipped to low tariff countries such as Vietnam and Mexico for reprocessing or repackaging, and then labeled with other origin labels before being exported to the United States. In response, the US Customs and Border Protection (CBP) typically initiates anti circumvention investigations, increases inspection efforts, and imposes stricter legal penalties. However, when the number of illegal activities is huge and makes enforcement difficult, tariff policies may be delayed or forced to make other adjustments.

3. The extreme tariff policy of the United States may be adjusted due to domestic interests

The Trump administration has raised tariffs on Chinese products to 125%, ostensibly to protect domestic industries, but in reality, it has increased inflationary pressures, shifted tariff costs onto American consumers and businesses, and exacerbated the cost of living for ordinary people and supply chain tensions. In the short term, the Trump administration may continue to take extreme trade measures against China, but in the long run, this approach will trigger widespread public outrage and market risks. At the same time, the legitimacy of the President's abuse of the International Emergency Economic Powers Act to increase taxes has been questioned, and non-profit organizations and businesses are launching counterattacks through constitutional and administrative litigation channels, which will prompt the US government to re-examine the legality and authority of the President's actions. As domestic inflation and public skepticism continue to ferment, the United States is highly likely to ultimately adjust its current tariff policies based on domestic interests, limit the president's abuse of trade tools, and achieve a legal and institutional rebalancing.

3、 The legal response path of Chinese enterprises

Faced with the discriminatory and extreme tariff policies implemented by the Trump administration on Chinese products, Chinese companies need to adopt diverse and cautious response strategies to reduce policy shocks, stabilize international market share, and prepare for possible policy easing in the future.

1. Actively apply for tariff exemptions for related products

Chinese companies should closely monitor the US tariff exemption process and cooperate with importers to submit applications. Although the overall policy tends to be tough, the Office of the United States Trade Representative (USTR) still has exemption mechanisms for some products in the specific implementation process. Enterprises should prepare detailed materials through professional channels to prove that the relevant products are irreplaceable in the US market and that tariffs will harm US interests or affect the security of their industrial chain. The earlier the exemption application is submitted and the more fully the value of mutual dependence between China and the United States is demonstrated, the more likely it is to obtain a window for policy relaxation.

2. Strengthen cooperation with Europe and other regions

Chinese enterprises should decisively adjust their export structure and reduce their excessive dependence on the US market; Consolidate and expand the customer base of countries along the "the Belt and Road" by strengthening trade cooperation with Europe, ASEAN, Latin America and other regions. At the same time, accelerating the localization layout, such as establishing processing bases in Southeast Asia or Mexico, and building factories through third-party investment, can not only bypass discriminatory tariff barriers, but also enhance the resilience and adaptability of enterprises in the global industrial chain.

3. Actively respond to trade investigations

Although the current tariff policy towards China by the Trump administration has made it difficult for Chinese companies to continue exporting to the United States in the short term, Chinese companies must still pay attention to and actively respond to various trade investigations initiated by the United States, such as anti-dumping, anti subsidy, and 337 investigations. If export companies do not respond to the lawsuit in a timely manner, they will still be unable to export to the United States even if discriminatory tariff policies are lifted in the future. Only by submitting evidence and defenses in accordance with the law during the investigation process can companies retain their legal status in terms of procedures and legal principles, paving the way for their re-entry into the US market after the policy environment improves in the future. In other words, responding to lawsuits is not only a current compliance choice, but also an important guarantee for the long-term strategic layout of enterprises.

4、 Summary

In summary, the discriminatory and extreme tariff policies implemented by the Trump administration on Chinese products not only face serious legal disputes, but also struggle to achieve its claimed goal of protecting domestic industries in economic practice. This policy not only exacerbates inflation and supply chain difficulties within the United States, but may also stimulate illegal trade practices and trigger broader enforcement and compliance risks. In the future, with the advancement of domestic legal litigation and the escalation of political games in the United States, it cannot be ruled out that tariff policies may be forced to be adjusted or even redefined as the president's trade authority.

In this context, Chinese enterprises should adhere to rational response, actively participate in tariff exemption procedures, optimize international market layout, enhance compliance and litigation capabilities, in order to safeguard their legitimate rights and interests and long-term commercial interests. Only through a three in one response model of legal compliance, strategic flexibility, and global coordination can Chinese enterprises maintain resilience and initiative in the complex international trade landscape, and be fully prepared for future policy repairs and market restarts.