US-China Relations, Trade Dynamics, and Singapore’s Strategic Exposure
Policy Analysis Report | February 2026
ABSTRACT
The United States Supreme Court’s February 21, 2026 ruling invalidating President Donald Trump’s broad tariff authority under emergency powers legislation constitutes a watershed moment in the architecture of American trade policy. This paper examines the ruling’s ramifications across three analytically distinct but structurally interrelated domains: the constitutional and strategic dimensions of US tariff authority; the evolving bilateral trade relationship between the United States and China; and the systemic exposure of Singapore as an open, trade-dependent economy positioned at the intersection of great-power competition. Drawing on recent primary sources and established theoretical frameworks in international political economy, the paper argues that while the ruling constrains one instrument of coercive trade policy, it does not resolve the underlying structural tensions driving US-China economic decoupling — and may, paradoxically, accelerate Singapore’s imperative to diversify its economic partnerships.
- Introduction
On February 21, 2026, the United States Supreme Court delivered a landmark ruling striking down the sweeping tariffs imposed by President Donald Trump under emergency powers legislation. The decision constitutes a significant constitutional constraint on executive trade authority, invalidating a policy instrument that had formed the backbone of Trump’s second-term economic nationalism. The ruling did not, however, occur in a vacuum. It arrived against a backdrop of carefully managed US-China trade tensions, a fragile bilateral truce struck in October 2025, and Trump’s confirmed visit to Beijing scheduled for March 31 through April 2, 2026.
The political economy implications of this ruling extend well beyond the immediate Washington-Beijing dyad. For open, trade-dependent economies — and none more so than Singapore — the ruling introduces new vectors of uncertainty into a global trading system already undergoing structural reorganization. Singapore’s position as a major financial hub, a key node in regional value chains, and a country with deep trade linkages to both the United States and China makes it uniquely exposed to any reconfiguration of the bilateral relationship.
This paper proceeds in four parts. Section 2 analyzes the constitutional and strategic significance of the Supreme Court ruling within the domestic US context. Section 3 examines how the ruling reframes the US-China bilateral trade relationship and the dynamics of the upcoming summit. Section 4 assesses Singapore’s specific exposure and adaptive options. Section 5 concludes with broader implications for the rules-based international trading order. - The Supreme Court Ruling: Constitutional Significance and Strategic Residuals
2.1 The Legal Architecture of Trump’s Tariff Regime
Trump’s tariff program during his second term relied primarily on the International Emergency Economic Powers Act (IEEPA), an emergency authority statute that grants the president broad discretionary power to regulate international commerce in response to declared national emergencies. Under this authority, Trump imposed a 20% tariff on Chinese goods in early 2025, citing Beijing’s alleged failure to stem the flow of fentanyl precursor chemicals — a justification widely interpreted by trade law scholars as a pretext for broader mercantilist objectives.
Subsequently, Trump invoked the same authority to impose “reciprocal tariffs” on a wide range of trading partners, with China facing a 34% rate that temporarily escalated to triple-digit levels during a period of tit-for-tat retaliation. The legal challenge centred on whether IEEPA authorises the imposition of tariffs — a form of taxation — without specific Congressional authorisation, raising foundational questions about the separation of powers and the non-delegation doctrine.
2.2 The Ruling’s Constitutional Logic
While the full opinion merits detailed analysis beyond the scope of this paper, the ruling’s core logic appears to rest on a resurgent application of the major questions doctrine — the principle that Congress must speak clearly when delegating authority over decisions of vast economic and political significance to the executive branch. The Court’s majority evidently found that the broad tariff authority claimed under IEEPA exceeded what Congress had unambiguously authorised, representing an impermissible transfer of legislative power.
The ruling thus joins a lineage of recent decisions — including NFIB v. OSHA (2022) and West Virginia v. EPA (2022) — that have progressively narrowed the administrative state’s capacity to act without explicit Congressional mandate. For trade policy, this has potentially transformative implications: it may require the executive to rely more heavily on explicitly trade-specific statutory authorities, such as Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, which carry their own procedural requirements and constraints.
2.3 Strategic Residuals: The Administration’s Response
Trump’s immediate response to the ruling — imposing first a 10% and then a 15% temporary global tariff while pursuing alternative legal pathways — illustrates the administration’s determination to maintain economic pressure through alternative instruments. Several pathways remain viable. The Office of the US Trade Representative has an active investigation into China’s compliance with the Phase One trade agreement signed in 2020; a negative finding would permit Section 301 tariffs under established statutory authority. Additionally, Section 232 national security tariffs, which survived prior legal challenges, remain available for sectors deemed strategically sensitive.
Analysts at Teneo have noted that Beijing likely assumes tariffs can be “maintained or re-created with only modest difficulty,” given Trump’s demonstrated willingness to use multiple statutory authorities across both terms. This assessment is broadly correct: the ruling constrains the mechanism but not the political will, and the structural logic of US-China strategic competition — encompassing technology, supply chain independence, and military balance — ensures that trade pressure will remain a favoured instrument irrespective of the specific legal vehicle. - US-China Relations: Navigating the Post-Ruling Landscape
3.1 The October 2025 Trade Truce and Its Fragility
The October 2025 Trump-Xi summit in Busan, South Korea produced a one-year bilateral trade truce predicated on a 10% baseline tariff and China’s resumption of cooperation in restricting fentanyl precursor exports. This arrangement represented a managed equilibrium rather than a structural resolution: both sides acknowledged that tariffs remained elevated by historical standards, that underlying strategic tensions were undiminished, and that the truce was contingent on continued diplomatic engagement. The Supreme Court ruling now complicates this equilibrium.
From Beijing’s perspective, the ruling theoretically strengthens its negotiating position by reducing the credibility of Trump’s most expansive tariff threats. Sun Yun of the Stimson Center has observed that the ruling will provide China with “a moral boost in their negotiations,” but that Beijing is prepared for the scenario in which “nothing actually changes in reality.” This assessment reflects Chinese strategic caution: publicly exploiting a US domestic legal embarrassment would risk antagonising a president whose transactional decision-making means that personal rapport with Xi Jinping remains a significant variable in bilateral outcomes.
3.2 China’s Strategic Calculus Ahead of the Beijing Summit
Xi Jinping’s likely approach to the March-April summit reflects a sophisticated understanding of Trump’s psychology and decision-making architecture. Ali Wyne of the International Crisis Group has argued that the more Xi can strengthen his personal rapport with Trump, “the more likely it is that the fragile trade truce between the United States and China will take hold in earnest and that Trump will be amenable to security concessions that give China greater freedom of maneuver in Asia.” This framing correctly identifies the summit’s dual economic and security dimensions.
China’s negotiating interests extend well beyond tariff levels. Beijing seeks to arrest the trajectory of technological decoupling — including US export controls on advanced semiconductors and related manufacturing equipment — and to prevent the institutionalisation of an allied economic coalition directed against Chinese industrial policy. Purchase guarantees and macroeconomic commitments represent China’s preferred concession currency, as they are reversible and impose limited structural adjustment costs while offering Trump domestically legible wins.
3.3 The Structural Decoupling Trajectory
Notwithstanding the tactical manoeuvring around the summit, the structural trajectory of US-China economic relations points toward continued selective decoupling in strategically sensitive sectors. US policy — spanning both the Trump and Biden administrations — has institutionalised restrictions on Chinese access to advanced semiconductor technology, foreign direct investment screening has been tightened through CFIUS, and ally coordination through mechanisms such as the Chip 4 Alliance has deepened. These structural features of the bilateral relationship are largely insulated from the Court ruling and from summit-level diplomacy.
The implication is that the ruling modifies the tactical landscape without altering the strategic gradient. Bilateral trade in commodities and consumer goods may stabilise or even recover modestly if the summit produces tangible commitments; however, technology-intensive trade and investment will continue to contract as both governments operationalise their respective industrial policy ambitions — the CHIPS and Science Act on the US side, and Made in China 2025 and its successors on the Chinese side.
Dimension Pre-Ruling Status Post-Ruling Status Trajectory
Baseline Tariff (China) 10% (truce level) 10–15% (transitional) Uncertain / contested
Tech Export Controls Comprehensive restrictions Unchanged — statutory Continued tightening
USTR Section 301 Authority Active but underutilised Likely primary instrument Escalation possible
Summit Prospects Planned (Mar 31–Apr 2) Proceeding — Xi cautious Fragile stabilisation
Investment Screening (CFIUS) Strict Unchanged Tightening
Table 1: US-China Trade Relations — Key Dimensions Post-Ruling - Singapore’s Strategic Exposure and Adaptive Imperatives
4.1 Singapore’s Structural Position in the Global Trading System
Singapore’s economic model is predicated on openness: the city-state has one of the world’s highest trade-to-GDP ratios, consistently exceeding 300%. Its prosperity depends on maintaining productive economic relationships with all major powers simultaneously — a positioning that has historically conferred significant advantages but that is becoming increasingly difficult to sustain as great-power competition intensifies. Singapore is simultaneously a major trading partner and investment destination for both the United States and China, hosts significant regional headquarters of multinational corporations, and serves as a critical intermediary in regional financial flows and supply chains.
The bilateral trade data illustrates Singapore’s exposure. The United States is among Singapore’s largest trading partners and its single largest source of foreign direct investment. China is Singapore’s largest bilateral trading partner by merchandise trade volume. Any disruption to the US-China trade relationship — whether through escalating tariffs, regulatory restrictions, or supply chain reorganisation — transmits to Singapore through multiple channels: reduced demand for intermediate goods, financial market volatility, shifts in multinational investment allocation, and changes in regional production network configurations.
4.2 Transmission Channels of US-China Trade Turbulence
The mechanisms through which US-China trade tensions affect Singapore operate at several levels. At the direct trade level, Singapore exports significant volumes of electronics, chemicals, and refined petroleum products that are embedded in regional value chains serving both the US and Chinese markets. Disruptions to these chains — whether from tariff-induced demand contraction or deliberate supply chain diversification by multinationals — reduce Singapore’s export revenues and manufacturing output. The electronics sector, which accounts for a substantial share of non-oil domestic exports, is particularly exposed given its dependence on US technology inputs and Chinese assembly demand.
At the financial level, Singapore’s role as a major Asian financial centre means that US-China monetary and regulatory tensions transmit through capital flows, currency dynamics, and risk pricing. Periods of acute US-China tension tend to produce risk-off behaviour in regional markets, capital outflows from emerging market assets, and increased demand for safe-haven currencies — dynamics that can constrain Singapore’s monetary policy flexibility and affect asset valuations.
At the investment level, the reconfiguration of global supply chains — accelerated by the pandemic and now deepened by geopolitical fragmentation — is creating both opportunities and risks for Singapore. The ASEAN region has emerged as a significant beneficiary of China+1 diversification strategies pursued by multinationals seeking to reduce their dependence on Chinese manufacturing. Singapore has captured a disproportionate share of the high-value-added components of this reconfiguration — regional headquarters, financial services, logistics coordination — even as lower-cost manufacturing has gravitated to Vietnam, Indonesia, and Malaysia.
4.3 The Supreme Court Ruling’s Specific Singapore Implications
The Supreme Court ruling introduces a specific new dimension of uncertainty for Singapore’s strategic planning. Dan Kritenbrink, formerly assistant secretary of state for East Asian and Pacific affairs, has noted that Asian partners should expect “existing agreements [to] largely hold” as the implications are worked through, but that caution is warranted. For Singapore, the practical concern is that the ruling destabilises the predictability of US trade policy at a moment when Singapore has calibrated its trade agreements and diplomatic positioning based on certain assumptions about the US tariff environment.
Singapore’s bilateral Free Trade Agreement with the United States, in force since 2004, provides a degree of structural protection: FTA partners are generally more insulated from blanket tariff measures than non-FTA countries. However, this protection is not absolute, particularly where tariffs are imposed on national security grounds under Section 232, which the FTA does not necessarily override. The ruling’s effect on the predictability of Section 232 and related measures is therefore of direct concern to Singapore’s trade policy planners.
More broadly, Singapore’s economic diplomacy has emphasised institutional multilateralism — including its participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) — as a hedge against bilateral unpredictability. The ruling may reinforce the logic of this approach by demonstrating that US trade policy remains subject to domestic constitutional contestation that lies beyond the control of foreign partners.
4.4 Singapore’s Adaptive Options
Singapore’s response to the post-ruling environment is likely to operate along three vectors. First, deepening ASEAN economic integration: the ASEAN Economic Community framework, while imperfect, provides a degree of collective bargaining weight and supply chain resilience that individual member states lack. Singapore has a strategic interest in strengthening intra-ASEAN economic linkages, both to reduce dependence on extra-regional demand and to position the region as a coherent economic bloc in trade negotiations.
Second, accelerating participation in plurilateral trade agreements: Singapore is well-positioned to leverage its membership in both CPTPP and RCEP to deepen market access in the Indo-Pacific region. The Digital Economy Agreement framework, which Singapore has pioneered with Australia, New Zealand, Chile, and others, offers a pathway to rules-making in digital trade that bypasses the US-China deadlock in multilateral fora.
Third, strategic hedging in supply chain positioning: Singapore’s Economic Development Board has actively courted semiconductor, biotechnology, and advanced manufacturing investment, recognising that the global reconfiguration of strategic supply chains creates a window of opportunity for well-governed, institutionally stable locations. The sustained inflow of high-value manufacturing investment — particularly from US-headquartered firms seeking geopolitically neutral production nodes — represents a structural dividend that Singapore must continue to cultivate even as short-term trade uncertainty persists.
Risk Vector Severity Singapore’s Mitigation Lever
Electronics supply chain contraction High Diversify into semiconductor design & advanced packaging
Capital flow volatility / SGD pressure Medium MAS exchange rate-centred monetary policy framework
US tariff unpredictability affecting FTA value High Deepen CPTPP and RCEP engagement; digital trade agreements
Multinational investment diversion Low / Opportunity EDB-led targeted attraction of China+1 regional HQs
Table 2: Singapore Risk Matrix — Post-Ruling Trade Turbulence - Conclusion: Systemic Implications for the Rules-Based Trading Order
The Supreme Court’s ruling on Trump’s tariffs is best understood not as a resolution of the US-China trade conflict but as a constitutional recalibration that complicates its tactical management while leaving its structural drivers intact. The ruling reasserts Congressional primacy in trade law and may ultimately contribute to more durable and predictable trade policy by forcing the executive branch to seek legislative authorisation for major trade actions — a constraint that, over time, could restore some degree of institutional reliability to US trade commitments.
In the near term, however, the ruling introduces uncertainty at a moment of acute fragility in the global trading system. The US-China relationship enters the Beijing summit with new legal ambiguities, competing domestic pressures, and unresolved structural tensions. For Beijing, the ruling creates a tactical opening that must be handled with considerable strategic restraint. For Washington, it necessitates a rapid pivot to alternative legal authorities and, potentially, a more deliberate engagement with Congress on trade mandates.
For Singapore, the ruling underscores the fundamental precariousness of relying on bilateral US trade commitments as a cornerstone of economic security. The city-state’s long-term interests are best served by a rules-based multilateral trading order; the progressive erosion of that order — through unilateral tariffs, preferential bilateral deals, and the weaponisation of economic interdependence — represents the most significant structural threat to Singapore’s prosperity. The appropriate response is neither acquiescence nor confrontation, but the patient, systematic construction of a dense network of trade agreements, digital economy frameworks, and supply chain relationships that reduces dependence on any single bilateral nexus.
As Gabriel Wildau has noted, Beijing holds out hope that it can persuade Trump to lower tariffs in exchange for purchase guarantees. Whether or not that hope is realised in April, the deeper reconfiguration of the global trade architecture will continue on its own logic — and Singapore must navigate it with both clear-eyed analysis and strategic imagination.
References and Sources
Tang, D. (2026, February 22). Ruling against Trump’s tariffs creates new uncertainty in US trade relations with China. Associated Press / Yahoo Finance.
Hajdari, U. (2026, February 21). US Supreme Court blocks Trump tariffs in a major hit to White House agenda. Euronews.
Sun Yun, Director, China Program, Stimson Center. Quoted in Associated Press (2026).
Wyne, A., International Crisis Group. Quoted in Associated Press (2026).
Kritenbrink, D., The Asia Group. Quoted in Associated Press (2026).
Wildau, G., Teneo. Quoted in Associated Press (2026).
Cutler, W., Asia Society Policy Institute. Quoted in Associated Press (2026).
National Federation of Independent Business v. OSHA, 595 U.S. 109 (2022).
West Virginia v. Environmental Protection Agency, 597 U.S. 697 (2022).