In a swift reversal of Trump-era tariff policies and U.S. Treasury tax trajectories, major economies that endured the heaviest blows from former President Donald Trump’s global tariff regime over the past year have emerged as the biggest winners following the U.S. Supreme Court’s decision to overturn his emergency tariff measures. According to recent estimates by economists, Asia’s weighted average tariff rate is set to drop from 20% to 17%. On a broader measure covering all U.S. imports and trade partners, the average effective tariff rate has fallen to its lowest level since the April “Liberation Day” tariffs were announced.
After the Supreme Court ruled that Trump’s global tariffs under the International Emergency Economic Powers Act (IEEPA) were unlawful, large economies such as China, India, and Brazil now face lower tariffs on exports to the United States. Although Trump soon announced a new 15% global tariff proposal, analysis by Bloomberg Economics suggests this would lower the global average effective tariff rate from around 17% to approximately 12%—the lowest since the Trump administration’s worldwide “Liberation Day” tariffs took effect in April 2025.
For Asian economies as a whole, a Morgan Stanley research report indicates the weighted average tariff rate will decline from 20% to 17%, with the average tariff on Chinese goods falling significantly from 32% to 24%. However, given the Trump administration’s intent to rebuild its tariff framework through sector-specific and country-specific measures, this relief may be temporary. Tariffs exceeding 10% on countries like China could still be maintained or adjusted under other legal provisions.
Trump recently stated that, alongside the new 15% global tariff, he would preserve existing import tariffs under Section 301 and Section 232 frameworks and hinted at launching additional trade investigations. A White House fact sheet confirmed that Trump has directed the U.S. Trade Representative to initiate an investigation under Section 301 authority.
Nevertheless, “the peak period of uncertainty around tariffs and global trade tensions has largely passed,” wrote a team of Morgan Stanley economists led by Chetan Ahya. Overall, with U.S. Customs moving to halt collection of IEEPA-related tariffs after the Supreme Court’s ruling, export-oriented economies previously subjected to higher punitive rates may see near-term reductions in marginal tax burdens on U.S.-bound shipments.
Economists highlight China, India, and Brazil as key beneficiaries because—following the repeal of IEEPA tariffs and Trump’s subsequent shift to a uniform 15% rate under Section 122 of the Trade Act of 1974—the U.S. average effective tariff rate could fall significantly to around 12%.
“Renewed global trade uncertainty is drawing investor attention, which is negative for U.S. assets. The U.S. dollar’s decline may persist, and the S&P 500’s underperformance relative to other indices, especially in Asia-Pacific, could widen as investors price in these effects,” said Garfield Reynolds, senior MLIV Asia market analyst. “In terms of tariffs, Asia and emerging markets are likely the biggest near-term beneficiaries.”
The Supreme Court’s decision and subsequent tariff policy shifts have triggered market repricing—weakening U.S. assets while boosting Hong Kong equities. Trump’s newly announced 15% global tariff effectively resets the trade competition and growth dynamics for U.S. trade partners. For major exporters like China, the removal of an additional 10% fentanyl-related tariff further reduces punitive rates on exports.
Key losers include Western developed economies such as the U.K. and Australia, which had previously negotiated rates around 10% under the “reciprocal” tariff framework introduced on Liberation Day. On Monday, the U.S. dollar index and S&P 500 futures edged lower, while Nasdaq futures fell more than 1%, as trade policy uncertainty dampened optimism toward U.S. assets. Narratives around “selling U.S. assets” and the “collapse of American exceptionalism” have regained traction.
Amid rising policy uncertainty, some large investors are shifting away from U.S. markets, citing high equity valuations, excessive market concentration, and the benefits of a weaker dollar for emerging market debt and returns. This has fueled demand for portfolio diversification.
Hong Kong-listed large caps, long burdened by tariffs, have experienced relief as their fundamental growth outlook improves. While the U.S. dollar and equities face volatility, shares of Chinese companies in Hong Kong have risen sharply, particularly export-oriented and valuation-driven tech growth stocks—including those tied to artificial intelligence.
By Monday’s close in Hong Kong, the Hang Seng Tech Index—which includes Alibaba, Tencent, and SMIC, key players in China’s AI computing supply chain—surged more than 3%. Mainland Chinese markets remained closed for the Lunar New Year holiday.
As U.S. markets grappled with an “AI panic trade,” where investors sold off SaaS software firms, Chinese investors were actively buying AI-related stocks. This divergence reflects fundamental differences in how investors view cutting-edge AI: U.S. markets fear disruption to existing business models, while Chinese investors focus on growth opportunities after the Supreme Court’s ruling and the cost-saving potential of open-source AI adoption in China’s vast market.
U.S. officials are urging trade partners—including the U.K., Australia, the EU, and Japan—to adhere to previously agreed tariff rates and investment pledges. They also seek to extend a one-year trade truce with China, with Trump planning a visit to Beijing soon. “We need to ensure China fulfills its side of the trade agreement,” U.S. Trade Representative Jamieson Greer said on Fox News Sunday. “That means they will continue buying U.S. goods as promised.”
Canada and Mexico, which also faced fentanyl-related tariffs, stand to benefit as those tariffs are lifted. If exemptions under the USMCA remain, these countries will be in a “very favorable position,” wrote Bloomberg Economics senior economists Nicole Gorton-Caratelli, Chris Kennedy, and Maeva Cousin.
The new 15% rate puts countries that previously enjoyed a 10% rate, such as Australia and the U.K., at a relative disadvantage compared to China and India. Meanwhile, nations like Japan, which had a competitive 15% rate, now see that edge erased.
Although the Supreme Court’s ruling introduces fresh uncertainty, analysts note that global trade has shown resilience over the past year, and the overall change in average tariff rates remains modest, suggesting limited short-term impact. Goldman Sachs economists estimate that combining the Court’s decision with the new Section 122 tariff would reduce the effective tariff rate increase since early 2025 from just over 10 percentage points to 9 points.
“Imports from countries experiencing significant tariff cuts under the new policy will likely rebound sharply in coming months,” Goldman economists wrote. “But the GDP impact should be largely offset by inventory accumulation, corresponding consumer spending increases, reduced imports due to trade rerouting, and slight import declines from countries facing higher tariffs.”
Following the Supreme Court’s rejection of IEEPA tariffs, China is closely monitoring the Trump administration’s next steps. A Chinese Commerce Ministry spokesperson stated Monday that Beijing is conducting a comprehensive assessment of the ruling’s impact. “We have also noted that the U.S. is preparing alternative measures, such as trade investigations, to maintain tariffs on trade partners. China will closely monitor these developments and resolutely safeguard its interests,” the spokesperson said.
This marks China’s first official response since the Supreme Court overturned Trump’s global tariffs days earlier. Trump has since vowed to reinstate a 15% global tariff and launch new trade investigations to preserve overall tariff levels.
A key index tracking Hong Kong-listed Chinese companies rose as much as 2.6% early Monday, with the broader Hang Seng Index closing up 2.53%. Despite Trump’s new tariff, Bloomberg Economics estimates the average effective tariff rate will settle around 12%—the lowest since the April “Liberation Day” tariffs.
Previous investigations under Section 301 and Section 232 were used to impose tariffs on Chinese exports, automobiles, and metals. These alternative legal authorities could allow the White House to levy additional tariffs post-ruling. Still, for China, the Supreme Court’s removal of the 10% fentanyl tariff further reduces export costs.
After the Court invalidated IEEPA tariffs, U.S. Customs began halting collection under related tariff codes. Trump’s subsequent use of Section 122 to propose a temporary uniform global rate—currently set at 15% for 150 days—replaces the previous higher and more fragmented emergency tariff system with a lower, more uniform baseline. Thus, economies previously hit hardest by IEEPA tariffs, such as China and India, become relative “biggest winners.”
With Asia’s weighted average tariff declining (Morgan Stanley estimates a drop from ~20% to ~17%, and the average rate on Chinese goods falling from ~32% to ~24%), and China benefiting from the removal of fentanyl-related duties, marginal export costs to the U.S. decrease. Under this new “lower baseline + narrowed differentials” framework, China, India, and Brazil naturally emerge as winners.
However, labeling “all of Asia as the biggest winner” oversimplifies the situation: the uniform 15% rate disadvantages allies like the U.K. and Australia that previously secured 10% rates, while countries like Japan and South Korea lose their prior competitive tariff advantages.
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