Tariff Courts ⚖️

Market Musings 5/29/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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Markets whiplash as courts strike down #Tariffs before staying the decision pending more deliberation

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On Wednesday evening, the US trade court ruled that the White House didn’t have authority to impose its broad “reciprocal” #Tariffs. Overnight, global markets and US futures spiked on the development with markets opening solidly green in the morning.

However, Thursday afternoon, an appeals courts temporarily paused the decision to allow time for further review. Markets gave up some gains, but still finished higher for the day.

So, what does this mean?

Typically, Congress is supposed to have the power to impose #Tariffs, the White House had just been using federal emergency power laws to impose them. On Wednesday, the trade court ruled that the law did not grant the White House “unbounded authority” to impose the #Tariffs on essentially everyone. The order would have forced the US to end all the #Tariffs within 10 days.

However, Thursday midday, the appeals courts paused the decision allowing #Tariffs to remain in place while the case is reviewed.

Essentially after 24 hours, nothing policy-wise has really changed. However, there’s now a new twist to the #Tariffs drama with a scenario where the courts could ultimately overturn them.

So, what now?

Well, investors are obviously optimistic for the scenario where #Tariffs are ultimately just struck down after the case runs through the courts. (If only it was that easy… 😅) In the meantime, this likely prolongs the uncertainty around tariffs.

First, this will need to run through courts which may take months to resolve.

Second, even if resolved in courts, the White House could attempt to reimpose the #Tariffs through other means.

Finally, we’d expect deal negotiations, currently in-progress, will likely be delayed. It’s not a position of strength to negotiate if the threat is on thin ice with the courts. We’d expect other countries to compromise less while the threat of #Tariffs in-question.

Ultimately, this likely just extends the uncertainty where businesses and consumers remain in limbo. Again, we’re focused on macro data to gauge how the economy holds up. Resilient consumers and confident businesses will be necessary to avoid a #Recession.