Geopolitics · GEO

Chips in the Waiting Game — Who Gains Strength Before the May Summit

Tariff legal vacuum, Hormuz chokepoint, rare-earth countdown — three cards flipping simultaneously

Approx. 2,000 words · ~7-minute read

Key Takeaways

· The Supreme Court ruled IEEPA unconstitutional, downgrading the White House’s tariff leverage to a fundamentally different tier

· Day 45 of the Hormuz blockade: Brent crude breaks above $103/barrel, pushing inflation-driven political pressure toward negotiations

· The rare-earth suspension expires after the May summit — Beijing holds an implicit time lever

The world is watching the Strait of Hormuz. On the morning of April 13, U.S. Central Command announced a full maritime blockade of Iranian ports; Brent crude immediately surged past103 USD/barrel. Forty-eight hours earlier, ceasefire talks in Islamabad had collapsed — a 21-hour marathon negotiation yielded no signed agreement.

Yet beneath the noise of oil and missiles, another high-stakes contest — equally consequential for markets — is quietly approaching: exactly one month remains before Trump’s visit to China. Originally scheduled for late March, the trip was postponed by six weeks, officially citing the Iran conflict. But those six weeks of waiting are quietly reshaping the balance of power at the negotiating table.

Three cracks widen simultaneously

Crack #1: Washington

On February 20, the Supreme Court ruled 6–3 that IEEPA does not authorize the president to impose tariffs（Learning Resources, Inc. v. Trump(Chief Justice Roberts authored the majority opinion). It is the most severe judicial constraint on presidential trade authority in four decades. That same day, the White House urgently invoked Section 122 of the Trade Act of 1974 to impose a 10% temporary tariff on global imports — but the provision carries a 150-day sunset clause —expiring July 24, unless Congress votes to renew it.

On March 5, 24 states jointly filed suit in the U.S. Court of International Trade (CIT); the trial concluded on April 10. Current average U.S. tariffs on Chinese goods stand at approximately30%(per PIIE estimates). Tariffs imposed under IEEPA have lost their legal foundation; those levied under Section 301 and Section 232 remain valid but operate within sharply narrowed legal space. A former USTR official put it bluntly: "After the Supreme Court ruling, the White House’s tariff leverage at the May negotiations is no longer the same instrument."

The yuan’s trajectory confirms this assessment. USD/CNY closed at6.83on April 13, appreciating roughly 0.8% over the past month; its trading range narrowed from an early-April high of 6.88 to a low of 6.82 on April 8.No sharp appreciation — nor depreciation as a hedge. The PBOC is preserving exchange-rate flexibility, refusing to signal a unilateral direction ahead of negotiations. In other words, the exchange rate tells you: Beijing is also waiting — and can afford to.

Tariff Legal Timeline

Crack #2: Persian Gulf

The Iran conflict enters Day 45. Daily vessel transits through the Strait of Hormuz are far below the pre-war level of over 100 ships. Goldman Sachs warns: if the blockade persists another month, Brent’s annual average price will hold above100 USD/barrel. That means mounting domestic inflation pressure in the U.S.

Brent spiked to103 USD/barrelon April 13 — up roughly49%from its pre-war level of ~$69. This figure isn’t just an energy cost — it translates directly into political pressure ahead of the U.S. midterm elections.The longer the Hormuz blockade lasts, the thinner the patience of U.S. Asia-Pacific allies — especially Japan and South Korea — grows toward American policy. It’s a zero-sum game of strategic attention: every unit of focus consumed in the Middle East is one less unit available in the Pacific.

Brent Crude Price Trend (Source: Market Data)

Crack #3: Deep in the Supply Chain

In April and October 2025, China implemented two rounds of rare-earth export controls, covering seven heavy rare-earth elements and related compounds, metals, and magnets. In November 2025, the second round was temporarily suspended until November 2026. Xinhua confirmed on April 9 that civilian rare-earth export applications meeting criteria would be approved during the suspension period.

That sounds like a concession. But the IEA cut straight to the point:When a single country controls ~98% of heavy rare-earth refining capacity, "approval" itself is just another form of control. Suspension is not abandonment — it’s calibration.

Markets grasped the implication instantly. MP Materials — the sole U.S.-based rare-earth processor — closed at59.21 USDon April 9, with analyst consensus target price at79.50 USD— a 34% upside expectation almost entirely predicated on the assumption that Chinese supply could tighten again at any moment. The U.S. Department of Defense has even guaranteed MP’s magnet factory a floor price of NdPr oxide at110 USD/kg, effectively using taxpayer funds to insure against rare-earth decoupling. The entire rare-earth sector trades independently of broader market indices and interest rates — tracking only policy signals. That alone signals markets view this contest as structural, not resolvable by a single summit.

Rare-Earth Control Timeline and Scope

The Logic of the Waiting Game

Laid side-by-side, these three cracks reveal a structural reality:The side waiting is accumulating leverage; the side delaying is burning it.

Tariff leverage is shrinking. After the Supreme Court struck down IEEPA, the White House’s toolkit degraded from "declare emergency → impose tariffs" to "require specific statutory authority + face judicial review." The 10% global tariff under Section 122 expires in 150 days; litigation by 24 states is underway, raising material legal risk. Though Section 301 investigations have begun (public comment closes April 15; hearing April 28), the procedural timeline — from investigation to actual tariff imposition — runs in months, missing the May summit window.

Meanwhile, the Iran conflict continues draining resources from the other end. Oil prices holding above $100/barrel directly amplify inflation expectations, eroding the domestic political basis for "pressure-to-negotiate." And the rare-earth suspension expiry date (November 2026) falls well after the May summit — creating an implicit time lever: unsatisfactory outcomes mean controls can resume and escalate at any moment.

Put plainly, patience is strategy. Declining to lock in a framework deal in March lets time do the work — legal procedures weaken the opponent’s tariff weapon, the Middle East conflict drains political capital, and supply-chain dependence strengthens Beijing’s hand. Each additional week shifts the equation further.

The Hang Seng Tech Index and U.S.-listed Chinese stocks reflect this logic. Hang Seng Tech closed at4,813 pointson April 13 — down ~18% from its year-to-date peak of 5,903. A near-4% intraday rebound on April 8 following Iran ceasefire news quickly reversed, leaving the index oscillating between 4,600 and 5,200 on shrinking volume of HK$22.7 billion daily. KWEB (KraneShares CSI China Internet ETF) closed at28.75 USDon April 11 — down roughly34%from its 52-week high of 43.37 USD — a decline no longer reflecting valuation correction, but geopolitical risk premium.

Institutions aren’t positioning for direction — they’re waiting for direction: whether the May summit delivers signals of tariff de-escalation will determine where these assets go next.

Hang Seng Tech Index & KWEB Performance (Source: Market Data)

Pre-May Timeline

April 15, public comment period for the Section 301 investigation ends. Comments will define the scope of future tariff targets.

April 22, U.S.-Iran ceasefire agreement expires. If not extended, Hormuz tensions could escalate, pushing oil toward110 USD, further contracting global risk appetite.

April 28, Section 301 hearing. This is the last major trade-policy milestone before the May summit; its tone will signal the White House’s negotiating posture.

May 14–15, summit. Agenda is set: trade balance, tariff framework, technology controls, Taiwan. But the weight assigned to each item is being recalibrated by the three cracks above.

Key Uncertainty

A CIT ruling on Section 122 could land before the summit. If the court finds the 10% global tariff unlawful,the White House’s last short-term tariff card would also expire— fundamentally altering the May negotiating dynamic.

The world still watches Hormuz. But the table that will truly shape global asset flows in H2 sits in Beijing.

Worth Tracking

Apr 15: Section 301 comments · Apr 22: Ceasefire deadline · Apr 28: Section 301 hearing · May 14: U.S.-China Summit

This article presents independent analysis of personal views and does not constitute investment advice. Asset prices and market data cited herein are for reference only; investors should make decisions based on their own judgment. Sources: Supreme Court ruling, PIIE, Goldman Sachs, Trading Economics, IEA, Bloomberg.