The US Court of International trade has ruled that the Trump Administration’s trade tariffs, both reciprocal and fentanyl, are illegal.
The US Court of International Trade says Trump overstepped his authority - using a 1977 federal economic emergency law. The law does not specify tariffs as a tool available to the president to protect the United States from economic threats.
This leaves Trump trade policies in disarray. But it also effects the Big Beautiful Bill for the budget which relies on excessive estimates of tariff revenues (US$ 3 trn over 10 years) to fund an already excessive deficit which i estimate at 8% of GDP.
So what might be good for trade would be bad for bonds!
The outcome at this stage is random. Trump will fight like hell to redeem his trade policy.
The Trump team has appealed the Court of International Trade's decision, here's the typical path:
1. **United States Court of Appeals for the Federal Circuit:** The first appeal would go to this court. It has exclusive jurisdiction over appeals from the Court of International Trade.
2. **Supreme Court of the United States:** After the Federal Circuit rules, the Trump team could petition the Supreme Court to hear the case.
Failing all that Trump,will probably try to pass legislation through Congress authotising his use of emergency powers.
My advice is to await greater certainty before changing strategy. All that has happened so far is to increase uncertainty. That won’t boost economies.
D