The S&P/ASX 200 Index (ASX: XJO) is down 0.2% in early trade today after investors awakened to the reality that United States President Donald Trump's global tariff campaign is not dead in the water.
That's a far cry from the news investors were celebrating yesterday, with the ASX 200 closing up 0.2% after the US Court of International Trade blocked many of those tariffs. The court ruled that Trump had misused the International Emergency Economic Powers Act (IEEPA) in rolling out tariffs on most nations across the world.
Noting that Trump had exceeded any authority granted to the president by IEEPA, the Trade Court stated:
The court does not pass upon the wisdom or likely effectiveness of the president's use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [the IEEPA] does not allow it.
But it didn't take long for the US Court of Appeals for the Federal Circuit to give the Trump tariffs a temporary reprieve. So, for now, they're still in effect.
Commenting on the US tariff gyrations and the impact on the ASX 200 and global stock markets, Josh Gilbert, market analyst at eToro told the Motley Fool, "The tariff news flow is changing day-to-day, and that's a reminder to manage your risk, especially given that it's far too early to see how this will play out."
Indeed.
ASX 200 could see more big swings on changing US tariff news
Both sides of the Trump tariff debate are digging in.
On one side, Connecticut Attorney General William Tong said he believes the courts will inevitably decide to block the Trump tariffs permanently (courtesy of Bloomberg).
"This temporary stay does not change the underlying facts. Trump concocted a fake emergency to launch a lawless and pointless trade war," Tong said. "His tariffs have inflicted needless chaos and economic uncertainty."
If Tong is right, it could offer further support for ASX 200 stocks that took a beating after Trump's 2 April 'Liberation Day' tariff announcement.
However, on the other side of the debate, Trump's top officials are adamant that tariffs will remain, one way or another.
"I can assure you, American people, that the Trump tariff agenda is alive, well, healthy, and will be implemented to protect you, to save your jobs and your factories," US trade adviser Peter Navarro said (quoted by Bloomberg).
White House Press Secretary Karoline Leavitt added:
America cannot function if President Trump, or any other president, for that matter, has their sensitive diplomatic or trade negotiations railroaded by activist judges. Ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.
But even if the conservative majority Supreme Court rules against the Trump tariffs, which I believe is unlikely, the ASX 200 and global stock markets might not get the relief rally you'd expect.
That's because the Trump administration has already signalled that it will pursue tariffs through other avenues.
"There are different approaches that would take a couple of months to put these in place and using procedures that have been approved in the past or approved in the last administration, but we're not planning to pursue those right now," National Economic Council director Kevin Hassett noted.
