The U.S. Court of International Trade issued an important and timely ruling full of far-reaching implications for President Trump’s industrial strategy. The court found Trump’s broad-brush global tariffs exceeded his authority. This politically astute decision centrally stopped his nationalistic, tariff-mania economic plan dead in its tracks. This historic ruling undermines the President’s power. It creates a spontaneous disturbance across global financial markets, affecting exchange rates between currencies dramatically, such as GBP/USD.
On that ruling day, Friday, the court’s decision was already having all kinds of mixed effects on financial markets. Investors observed that GBP/USD was still feeling the strain, trading well under the 1.3500 level as trade began in Europe. The currency pair disappointed the bears with a late round-tripping rebound. The ruling unexpectedly changed market sentiment, resulting in a drop.
At issue in the court’s ruling were Trump’s global levies. He had championed these tariffs as key to defending American industries and revitalizing American manufacturing. The court found these tariffs inconsistent with legal standards, putting the efficacy of the President’s preferred economic policies into serious question. The ruling represents a considerable blow to the rest of Trump’s economic agenda. He relied almost entirely on tariffs to leverage action from our global trade partners.
Markets worked quickly to respond to the surprise legal turn. Traders and analysts immediately turned their attention to the next round of economic indicators – especially the U.S. PCE inflation data. The potential that this data could have an even greater impact on currency movement and general market strategy should unfold in the days ahead.
The U.S. Court of International Trade’s ruling isn’t just a win for Trump’s policies. In short, it is a signal of a deep potential change in the patterns and policy goals that will govern and enforce American international trade relations. Like legal experts, we hope this decision will serve as a strong precedent. It would limit subsequent administrations from advancing tariffs without robust legal justification.