Why the market could be getting this wrong by rallying on the court blocking Trump's tariffs

CNBC

29-05-2025

Wall Street's excitement after the latest trade development may be short lived. Stock futures rallied overnight after a U.S. federal trade court struck down President Donald Trump's so-called reciprocal tariffs. Safe-haven gold fell to a one-week low on the news, as traders around the world moved into riskier assets. U.S. Treasury prices also rallied, pushing yields lower. But while the court ruling halts levies that would pressure corporate profit margins and drive consumer prices higher, it also adds another layer of complexity at a time when investors are trying to look past trade headwinds. "The court injunction … poses a double-edged sword for [rest of world] negotiators, who may start to adopt Beijing's longstanding philosophy that the U.S. is a 'paper tiger' – with the risk of prolonging trade war uncertainty instead of offering up new concessions," wrote Grace Fan, global policy analyst at TS Lombard. @DJ.1 1D mountain Dow futures intraday Trump also has other paths to push through tariffs, including sectoral levies . Goldman Sachs pointed out the president an implement a tariff of up to 15% under Section 122 of the 1974 Trade Act as well. What's more, the administration is expected to appeal the ruling. "The tariff drama isn't over – Trump has other legal avenues to pursue an aggressive tariff agenda, and investors expect he will utilize them," wrote Adam Crisafulli of Vital Knowledge. The market may already be quickly coming around to Crisafulli's way of thinking. By 8:40 a.m. ET, Dow Jones Industrial Average futures had given back most of their initial gains, trading about 100 points higher. They surged over 500 points overnight. S & P 500 and Nasdaq-100 futures were also off their highs. Bond yields were flat on the session by that time, and gold bounced from its overnight lows. "The only thing this court ruling did was extend the uncertainty of how this ends. All of the 'to be annouced' trade deals likely are now on ice and, if Trump wins on appeal, he'll hit harder and faster in round two," Jamie Cox of LPL Financial told CNBC's Brian Evans in an email. "Given how far along things were and seemingly causing less heartburn than feared, this ruling may be effective in restraining the executive, but not accomplish much otherwise."