WASHINGTON — US factory equipment maker OTC Industrial Technologies has long used low-cost countries to supply components — first China and later India —  but President Donald J. Trump’s blitz of tariffs on numerous trade partners has upended the supply chain math for Chief Executive Officer (CEO) Bill Canady.

“We moved things out of China and went to some of those other countries, and now the tariffs on those are as bad or worse,” Mr. Canady told Reuters. “We just have to hang on and navigate our way through this so we don’t all go broke in the short run.”

It is a dilemma that is sinking in with companies, foreign trade ministries, trade lawyers and economists as the US Supreme Court considers the legality of Mr. Trump’s global tariffs, with arguments set for Wednesday. Under one legal authority or another, Mr. Trump’s tariffs are expected to stay in place long term.

LOWER COURTS RULE AGAINST TRUMP
The court, whose 6-3 conservative majority has backed Mr. Trump in a series of major decisions this year, is hearing his administration’s appeal after lower courts ruled that the Republican president overstepped his authority in imposing sweeping tariffs under a federal law meant for emergencies.

A ruling striking down Mr. Trump’s use of the 1977 International Emergency Economic Powers Act, or IEEPA, to quickly impose broad global tariffs also would eliminate a favorite cudgel to punish countries that draw his ire on non-trade political matters.

These have ranged from Brazil’s prosecution of former president Jair Bolsonaro to India’s purchases of Russian oil that help fund Russia’s war in Ukraine.

“If we don’t have tariffs, we don’t have national security, and the rest of the world would laugh at us because they’ve used tariffs against us for years and took advantage of us,” Mr. Trump told reporters on Air Force One on Sunday.

“We were subject to being abused by a lot of other countries, including China — for years, not anymore. Tariffs have brought us tremendous national security,” Mr. Trump said, reinforcing a key justification for the duties.

Mr. Trump added that he will not attend Wednesday’s arguments, but Treasury Secretary Scott Bessent told the Fox News Channel that he would attend to “emphasize that this is an economic emergency.”

Mr. Trump is the first president to invoke this statute — which often has been used to apply punitive economic sanctions to adversaries — to impose tariffs. The law provides a president broad authority to regulate a variety of economic transactions when a national emergency is declared.

In this case, Mr. Trump deemed a $1.2-trillion US goods trade deficit in 2024 a national emergency — even though the United States has run trade deficits every year since 1975 — and also cited overdoses of the often-abused painkiller fentanyl.

Mr. Bessent told Reuters that he expects the Supreme Court to uphold the IEEPA-based tariffs. But if it strikes down the tariffs, Mr. Bessent said in an interview, the administration will simply switch to other tariff authorities, including Section 122 of the Trade Act of 1974, which allows broad 15% tariffs for 150 days to calm trade imbalances.

Mr. Bessent said Mr. Trump also can invoke Section 338 of the Tariff Act of 1930, a statute that allows tariffs up to 50% on countries that discriminate against US commerce.

“You should assume that they’re here to stay,” Mr. Bessent said of Mr. Trump’s tariffs.

For countries that have negotiated tariff-lowering trade deals with Mr. Trump, “you should honor your agreement,” Mr. Bessent added. “Those of you who got a good deal should stick with it.”

The Supreme Court case covers only a portion of the tariffs Mr. Trump has imposed this year. His administration already is using other authorities for certain tariffs. He is busy piling up tariffs under Section 232 of the Trade Expansion Act of 1962 involving national security concerns to protect strategic sectors including autos, copper, semiconductors, pharmaceuticals, robotics and aircraft, as well as tariffs under Section 301 of the Trade Act of 1974 involving unfair trade practices investigations.

“This administration is committed to tariffs as a cornerstone of economic policy, and companies and industries should plan accordingly,” said Tim Brightbill, co-chair of law firm Wiley Rein’s trade law practice in Washington.

NEGOTIATING POWER
Trump administration officials have touted his tariffs as pushing major trading partners such as Japan and the European Union to negotiate major concessions that will help to reduce the US trade deficit, arguing those concessions will survive any Supreme Court ruling.

US trade partners are not waiting for a Supreme Court ruling in deciding how to proceed. The US Trade Representative’s office has announced finalized framework trade deals with Vietnam, Malaysia, Thailand and Cambodia, locking in tariff rates of 19% to 20%. South Korea agreed to terms on a $350-billion investment plan, unlocking a 15% tariff for its cars and other goods.

Negotiations with China have proven more difficult due to its willingness to retaliate against the United States and cut off its supplies of rare earth minerals and magnets essential for US high-tech manufacturing from autos to semiconductors.

Instead of major concessions, Mr. Trump’s administration has had to settle for extensions of a delicate truce under which American and Chinese tariffs were reduced to keep the rare earths flowing.

In South Korea last Thursday, Mr. Trump agreed in talks with Chinese President Xi Jinping to halve the US tariff rate on Chinese goods related to fentanyl to 10% and to delay tighter technology export controls for a year in exchange for China’s year-long pause on its tough licensing requirements for global rare earth exports.

Mr. Xi agreed to resume purchases of American soybeans that China had halted for months, while Mr. Trump paused new US port fees for China-linked ships for a year.

REVENUE, INVESTMENT CONCERNS
Some investors have said financial markets, which have grown accustomed to the Trump tariff status quo, could be thrown into turmoil if the Supreme Court strikes down the IEEPA tariffs.

A major reason for concern, particularly in the Treasury debt market, is the risk of having to refund more than $100 billion in IEEPA tariff collections and forgoing hundreds of billions of dollars of revenue annually.

The IEEPA tariffs collected so far this year make up the biggest portion of a $118 billion increase in net customs receipts in the 2025 fiscal year that ended on Sept. 30. That helped offset rising healthcare, Social Security, interest and military outlays, helping shrink the US deficit slightly to $1.715 trillion.

“It’s a significant political economy risk that we get addicted to tariff revenue,” said Ernie Tedeschi, a senior fellow at the Yale University Budget Lab, adding that makes it harder for any future presidential administration to lower the duties.

Getting the money back also would be difficult, as a tariff reversal “is unprecedented at this scale” for US Customs and Border Protection, said Angela Lewis, global head of customs at freight forwarder and customs broker Flexport.

The onus could be on individual importers to apply for “post-summary corrections” with the agency, a messy process that could take years and not be worthwhile for some smaller firms, Ms. Lewis said. For those getting refunds, US taxpayers also would be on the hook for 6% annual interest costs compounded daily.

INFLATION TIMING
The biggest dilemma is managing costs. Importers for the most part have eaten the tariffs, according to academic studies and comments from executives, reducing profit margins but limiting higher consumer prices and protecting market share.

While this has dampened the inflationary impact so far, cost pass-throughs are broadening through clothing and other goods prices, according to Oxford Economics, which estimated that tariffs added 0.4 percentage point to September’s consumer price index annual rate of 3%, keeping inflation well above the Federal Reserve target.

Corporate earnings have taken the biggest hit, with global companies flagging more than $35 billion in tariff-related costs so far heading into third-quarter earnings season.

Ohio-based OTC designs and builds factory production lines and automation systems. Soon, CEO Canady said, companies like his will have to “place their bets” on where to shift production for a more sustainable cost base. That may mean back to US shores for high-end products, and to Mexico for lower-value parts.

“I think the new normal is going to be 15%,” Mr. Canady said of Mr. Trump’s tariffs, regardless of the legal authority he invokes. “They’re going call it whatever they need to call it so that it is not challengeable.” — Reuters

BEIJING — China’s President Xi Jinping on Tuesday sought to expand mutual investment with Russia and affirmed Beijing’s commitment to advance ties despite “turbulent” external conditions, Chinese state media reported.

Mr. Xi met Russian Prime Minister Mikhail Mishustin in Beijing at the Great Hall of the People, a day after Chinese Premier Li Qiang held a meeting with Mr. Mishustin in Hangzhou, where Mr. Li said China wanted to strengthen cooperation with Russia and defend shared security interests.

The Kremlin has highlighted the significance of Mr. Mishustin’s visit at a time when Russia is under major Western sanctions over its war in Ukraine and looking to stem a recent slowdown in trade with China.

“China-Russia relations have stayed the course toward higher-level and higher-quality development, advancing steadily despite a turbulent external environment,” Mr. Xi told Mr. Mishustin, according to state broadcaster CCTV.

“Safeguarding, consolidating and developing China-Russia relations is a strategic choice for both sides,” Mr. Xi said.

He highlighted industries such as energy, agriculture, aerospace, digital economy and green development where the two countries could advance cooperation and foster new engines of growth.

Mr. Mishustin said it was important for both sides to continue creating favorable conditions for attracting mutual investment and supporting joint projects, according to Russia’s TASS news agency.

Mr. Xi and Russian President Vladimir Putin signed a “no-limits” partnership in February 2022 days before Mr. Putin sent tens of thousands of troops into Ukraine.

Since then, Russia has turned to China to blunt the impact of sanctions, highlighting record trade, increased settlements in yuan and deepening energy cooperation.

Bilateral commerce has, however, declined in recent months as China faces mounting US pressure over trade and technology.

Chinese state oil majors suspended purchases of seaborne Russian oil following US sanctions on Rosneft and Lukoil, Moscow’s two biggest oil companies, Reuters reported last month.

In a joint communique published on the Russian government website on Tuesday, both countries agreed to “strengthen cooperation in all spheres and respond appropriately to external challenges.”

Russia also reaffirmed its adherence to the “one-China” principle and opposition to “Taiwan independence.”

China regards democratically ruled Taiwan as part of its territory. Taiwan’s government rejects Beijing’s claim and says only the island’s people can decide their future. — Reuters

SEOUL — South Korean President Lee Jae Myung said on Tuesday the economy has turned a corner as risks related to geopolitics and corporate governance have been easing, which has boosted the local Kospi stock index beyond the 4,000 mark.

“Consumer sentiment is improving, and economic growth in the third quarter has rebounded to a six-quarter high of 1.2% from a contraction in the first quarter,” Mr. Lee said in his annual budget speech at the National Assembly.

“We are now out of crisis status, having taken steps with some extraordinary determination the past five months to cope with a severe economic crisis caused by the illegal martial law.”

Asia’s fourth-biggest economy expanded by 1.2% in the third quarter, as exports have generally held up despite uncertainties related to US tariffs.

Domestic demand has also been improving, underpinned by the Lee government’s extra budget of more than $20 billion, which included two rounds of cash handouts that boosted spending at restaurants and in the retail sector.

For 2026, Mr. Lee proposed an 8.1% increase in spending from this year’s government budget to 728 trillion won ($512.14 billion), more than triple the 2.5% expansion of the 2025 budget.

He said the government planned to channel support into artificial intelligence, Korean cultural and entertainment content, shipbuilding and semiconductors to spur an “economic transformation.” ($1 = 1,421.4800 won). — Reuters