The Trump administration is getting ready for that sort of legal fight. This follows a lower court judgment that found against most of its “reciprocal” tariffs. The administration is just as intent on defeating that decision. They could ask for a stay from the Supreme Court any day now, and as soon as this Friday. This tenuous situation has developed a greater risk aversion in the tone of the markets. This shift is most recently rattling major indices like the S&P 500 and Nasdaq Composite.
When President Trump voluntarily put most of those tariffs on hold on April 8, a move that had sent markets reeling just weeks earlier, in the four trading days leading up to this pause, the markets had lost more than a week’s worth of trading. An appeals court stayed the Court of International Trade’s decision on Thursday afternoon. To salvage the economy, the S&P 500 shot up, jumping almost 19%, a return since April 8th closing value.
Much of the market optimism has been based on hopes that the U.S. will soon reach trade agreements with an array of countries. We look forward to seeing such agreements eliminate export duties on these products. They will help give businesses and consumers more confidence as they face today’s uncertain economic conditions. Nonetheless, even with these positives, there is still much uncertainty. Retaliatory tariffs Trump imposed on Chinese imports are still being challenged defensively in ongoing legal challenges.
On his CNBC show “Mad Money,” Jim Cramer underscored the heavy and harmful effects these tariff policies are wreaking. He focused on the precarious place that the administration now finds itself in. He noted that if the judiciary ultimately rules against the tariffs, it could jeopardize Trump’s ability to negotiate new trade deals.
“Right now, the administration has to hope that our trading partners believe the Supreme Court will uphold the tariffs, or that another lawsuit against the next iteration of tariffs will somehow fail. Because if the judiciary shoots down the tariffs, Trump has zero cards to negotiate new trade deals.” – Jim Cramer
The vagueness of these legal questions has been a major sore spot for market investors. Cramer further remarked, “In that sense, but only in that sense, maybe the judiciary shooting down the tariffs is the easiest way out of this nightmare.”
Karoline Leavitt expressed her views on the matter, stating that continued legal challenges “are threatening to undermine the credibility of the United States on the world stage.”
In Thursday’s upbeat market, those indices were up 0.4% with S&P 500 and Nasdaq Composite setting new record highs. It has become an issue that analysts and investors now closely watch the effects of trade agreements.