Although President Donald Trump’s tariffs have kept a high profile of late, that enthusiastic resurgence comes on the heels of two significant court rulings last week that placed them in legal limbo. A federal appeals court has just granted the administration’s request. This action formally stays a court decision from earlier this year and brings back into effect the responsibilities under fire. This development comes as trade tensions between the United States and China intensify, with Trump’s comments suggesting concerns about China’s trade practices.
The decision to reinstate these tariffs is the result of a yearlong debate within President Trump’s cabinet-level economic advisors. And though they are legally challenged, they continue their rosy predictions about how these tariffs will reshape trade to suit the administration’s hope. Commerce Secretary Howard Lutnick took this to heart when he appeared on Fox News. He surmised, “The tariffs aren’t going anywhere.”
No wonder President Trump recently used his new platform, Truth Social, to announce that China “has been ripping off the United States.” He reaffirmed his administration’s support for the thawing trade dispute with China. The timing of his comments couldn’t be worse, considering that trade tensions between the two countries have surged to their highest levels since the skirmish began last week.
Official economic advisors to the administration, such as Kevin Hassett, have been adamant that the administration is on strong legal ground with these tariffs. Hassett remarked, “I am very confident that the judges will uphold this law,” reflecting a belief that the tariffs will remain a key tool in the administration’s trade policy.
Through all these tumultuous developments, U.S. financial markets have exhibited strong bullish momentum. Small caps soared, with the Russell 2000 index up a stunning 5.2% this month alone. This is its strongest showing since November 2024 and it does so finally snapping a three month losing streak. Furthermore, the S&P 500 was up 1.88% w-o-w, logging its second positive week in three. The Nasdaq Composite rocketed more than 9% this month on the average. All this while the Dow Jones Industrial Average shot up 4%.
The S&P 500 index jumped by about 6.15% this month. This monumental increase snapped a three-month losing streak and was its largest increase since last November 2023. That market optimism is echoed in more general financial optimism despite ongoing talk about tariffs and a trade war.
Speculation is intensifying that one thing President Trump will be talking to China’s president Xi Jinping about will be these tariffs. These negotiations might start as soon as this week. Advisors such as Hassett have pointed out how crucial these discussions are for U.S. trade balance moving forward. Though a date has not been determined, the issues being debated could fundamentally change the landscape.