Latest news with #TradeAct
The Star
an hour ago
- Business
- The Star
Trump tariff reprieve could create more risk in Treasury market
US President Donald Trump. — Reuters INVESTORS worldwide woke up last Thursday to news that the US Court of International Trade had ruled that US President Donald Trump exceeded his authority with many of the tariffs announced since January. But this news isn't as good as it may seem at first glance, especially for the US Treasury market. For now, the Trump administration has been given 10 days to return previously paid tariffs with interest to importing businesses. But in the meantime, the US Federal Court of Appeals can stay the lower court's order. And no matter what the appeals court decides, it seems likely that the case will make its way to the Supreme Court, which probably would not decide on the case until next June. A resolution is thus likely at least a year away. Until then, the legal uncertainty adds to the already record-high economic uncertainty being engendered by the Trump administration. Trump will likely try to find workarounds to impose the tariffs anyway. Section 301 of the 1974 Trade Act appears to give the president the power to impose tariffs against foreign countries and businesses if they engage in 'unfair trade practices'. This was the legal authorisation that President Joe Biden used to impose tariffs on Chinese electric vehicles, solar cells and other critical materials. It seems plausible that this act could be used as justification for imposing tariffs based on the 'unfair' practices – however ill-defined – that Trump believes created the United States trade deficit with other nations. Of course, these attempts would also be challenged in court and would likely make their way to the Supreme Court as well. If the various decisions ultimately go against the Trump administration, this would not only have serious implications for presidential powers moving forward, but also US Treasuries right now. The non-partisan Tax Foundation estimates that the tariffs Trump announced in recent months will bring in up to US$1.4 trillion in revenues over the next decade based on conventional assumptions. If the tariffs' potential negative impacts on gross domestic product (GDP) growth and inflation are taken into account, the additional revenue would likely be smaller, but it could still amount to more than US$920bil, according to the Tax Foundation. Meanwhile, the United States Congress is currently debating the Trump administration's budget bill, which includes significant tax cuts. The Tax Foundation estimates that this bill, if enacted, will increase budget deficits by an average of 1.4% of GDP per year over the next decade. This means the United States is projected to run budget deficits in excess of 7% of GDP for the foreseeable future. If the tariff revenues are eliminated, this deficit could increase by another 0.4% of GDP each year. My calculations, which take into account the above projections for budget deficits as well as estimates for nominal GDP growth over the next 10 years, indicate that the debt pile of the United States could grow by US$4.3 trillion over the next decade and push the United States debt and GDP ratio to the same level as Italy's. The result would likely be even higher Treasury yields, particularly for long-dated bonds, as investors would reasonably demand a higher term premium, or excess compensation for the risk of holding long-dated bonds versus rolling over short-dated debt. The clearest sign that the market is already getting anxious about the United States fiscal position is the movement in credit default swaps. The cost to insure against a default of the United States government in the next five years has risen to 54 basis points in recent months. This is higher than the cost of insuring against a default of Italy and almost as high as the insurance premium for Greece. — Reuters Joachim Klement is an investment strategist at Panmure Liberum. The views expressed here are the writer's own.
Euronews
3 days ago
- Business
- Euronews
European stocks rise as Trump tariffs are temporarily reinstated
A Federal appeals court temporarily blocked a ruling from the Court of International Trade that barred most of the Trump administration's sweeping tariffs on global trading partners. The legal development reignited uncertainty, sparking renewed sell-offs in US stock markets. However, European markets rose on Friday despite the reinstatement. The decision provides the White House with additional time to defend the legality of the president's efforts to reshape global trade relations. Federal officials signalled that the same level of import levies could be reintroduced under alternative legal authorities, although enacting tariffs via other sections of the Trade Act could take several months. 'I can assure the 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, and to stop shipping foreign wealth — our wealth — into foreign hands,' Peter Navarro, Trump's top trade adviser, said on Thursday. Trump had invoked the International Emergency Economic Powers Act (IEEPA) to impose the so-called reciprocal tariffs announced in early April. However, on Wednesday, the trade court ruled that the president does not have the authority to impose such broad levies under the IEEPA. 'America cannot function if President Trump — or any other president, for that matter — has their sensitive diplomatic or trade negotiations railroaded by activist judges,' said White House Press Secretary Karoline Leavitt. 'Ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.' The US stock markets initially jumped on the original court ruling, alongside positive quarterly earnings results from Nvidia. However, major indices gave up early gains despite a higher close on Thursday. During Friday's Asian session, US stock futures continued to fall as risk-off sentiment prevailed. As of 4 am CEST, Dow Jones Industrial Average futures were down 0.08%, while the S&P 500 and Nasdaq 100 futures both declined 0.26%. European markets, however, were higher on Friday with the Euro Stoxx 50 up 0.54%, Germany's DAX up 0.95% and France's CAC 40 rising 0.32% by 13:30 CEST. Investors will be closely watching the progress of US-EU trade talks, though the legal battle surrounding the Trump administration's tariffs is adding complexity to the outlook. Asian equity markets traded mostly lower on Friday morning. Hong Kong's Hang Seng Index fell 1.4%, Japan's Nikkei 225 lost 1.39%, and South Korea's Kospi dropped 0.61%. Australia's ASX 200 was flat as of 3:10 am CEST. The latest court developments have once again dented investor confidence in US assets, particularly the dollar. Yields on US government bonds initially jumped to 4.5% but later pulled back to 4.42% as Treasury prices came under renewed pressure. Meanwhile, haven assets have rallied. Gold jumped, and the euro, the Swiss franc, and the Japanese yen all strengthened significantly. The euro rebounded sharply from an intraday low against the dollar on Thursday after the tariff ruling was paused. The EUR/USD pair fell as low as 1.1210 before surging to 1.1353 as of 3:11 am CEST on Friday. Gold futures also swung higher, climbing to $3,321 per ounce from an intraday low of $3,269 on Thursday.
Yahoo
3 days ago
- Business
- Yahoo
Wall Street retreats as Trump tariffs get a temporary reprieve from appeals court
A Federal appeals court temporarily blocked a ruling from the Court of International Trade that barred most of the Trump administration's sweeping tariffs on global trading partners. The legal development reignited uncertainty, sparking renewed selloffs in US stock markets and dragged the US dollar sharply lower from its intraday high. The decision provides the White House with additional time to defend the legality of the president's efforts to reshape global trade relations. Federal officials signalled that the same level of import levies could be reintroduced under alternative legal authorities, although enacting tariffs via other sections of the Trade Act could take several months. 'I can assure the 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, and to stop shipping foreign wealth — our wealth — into foreign hands,' Peter Navarro, Trump's top trade adviser, said on Thursday. Trump had invoked the International Emergency Economic Powers Act (IEEPA) to impose the so-called reciprocal tariffs announced in early April. However, on Wednesday, the trade court ruled that the president does not have the authority to impose such broad levies under the IEEPA. 'America cannot function if President Trump — or any other president, for that matter — has their sensitive diplomatic or trade negotiations railroaded by activist judges,' said White House Press Secretary Karoline Leavitt. 'Ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.' The US stock markets initially jumped on the original court ruling, alongside positive quarterly earnings results from Nvidia. However, major indices gave up early gains despite a higher close on Thursday. During Friday's Asian session, US stock futures continued to fall as risk-off sentiment prevailed. As of 4 am CEST, Dow Jones Industrial Average futures were down 0.08%, while the S&P 500 and Nasdaq 100 futures both declined 0.26%. European markets are also expected to open lower, according to futures pricing. The Euro Stoxx 50 was down 0.19%, and Germany's DAX slipped 0.15%. German equities extended losses for a second consecutive day on Thursday, following a record high on Tuesday. Investors will be closely watching the progress of US-EU trade talks, though the legal battle surrounding the Trump administration's tariffs is adding complexity to the outlook. Asian equity markets also traded mostly lower on Friday. Hong Kong's Hang Seng Index fell 1.4%, Japan's Nikkei 225 lost 1.39%, and South Korea's Kospi dropped 0.61%. Australia's ASX 200 was flat as of 3:10 am CEST. The latest court developments have once again dented investor confidence in US assets, particularly the dollar. Yields on US government bonds initially jumped to 4.5% but later pulled back to 4.42% as Treasury prices came under renewed pressure. Meanwhile, haven assets have rallied. Gold jumped, and the euro, the Swiss franc, and the Japanese yen all strengthened significantly. The euro rebounded sharply from an intraday low against the dollar on Thursday after the tariff ruling was paused. The EUR/USD pair fell as low as 1.1210 before surging to 1.1353 as of 3:11 am CEST on Friday. Gold futures also swung higher, climbing to $3,321 per ounce from an intraday low of $3,269 on Thursday.
Euronews
3 days ago
- Business
- Euronews
Wall Street retreats as Trump tariffs get reprieve from appeals court
A Federal appeals court temporarily blocked a ruling from the Court of International Trade that barred most of the Trump administration's sweeping tariffs on global trading partners. The legal development reignited uncertainty, sparking renewed selloffs in US stock markets and dragged the US dollar sharply lower from its intraday high. The decision provides the White House with additional time to defend the legality of the president's efforts to reshape global trade relations. Federal officials signalled that the same level of import levies could be reintroduced under alternative legal authorities, although enacting tariffs via other sections of the Trade Act could take several months. 'I can assure the 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, and to stop shipping foreign wealth — our wealth — into foreign hands,' Peter Navarro, Trump's top trade adviser, said on Thursday. Trump had invoked the International Emergency Economic Powers Act (IEEPA) to impose the so-called reciprocal tariffs announced in early April. However, on Wednesday, the trade court ruled that the president does not have the authority to impose such broad levies under the IEEPA. 'America cannot function if President Trump — or any other president, for that matter — has their sensitive diplomatic or trade negotiations railroaded by activist judges,' said White House Press Secretary Karoline Leavitt. 'Ultimately, the Supreme Court must put an end to this for the sake of our Constitution and our country.' The US stock markets initially jumped on the original court ruling, alongside positive quarterly earnings results from Nvidia. However, major indices gave up early gains despite a higher close on Thursday. During Friday's Asian session, US stock futures continued to fall as risk-off sentiment prevailed. As of 4 am CEST, Dow Jones Industrial Average futures were down 0.08%, while the S&P 500 and Nasdaq 100 futures both declined 0.26%. European markets are also expected to open lower, according to futures pricing. The Euro Stoxx 50 was down 0.19%, and Germany's DAX slipped 0.15%. German equities extended losses for a second consecutive day on Thursday, following a record high on Tuesday. Investors will be closely watching the progress of US-EU trade talks, though the legal battle surrounding the Trump administration's tariffs is adding complexity to the outlook. Asian equity markets also traded mostly lower on Friday. Hong Kong's Hang Seng Index fell 1.4%, Japan's Nikkei 225 lost 1.39%, and South Korea's Kospi dropped 0.61%. Australia's ASX 200 was flat as of 3:10 am CEST. The latest court developments have once again dented investor confidence in US assets, particularly the dollar. Yields on US government bonds initially jumped to 4.5% but later pulled back to 4.42% as Treasury prices came under renewed pressure. Meanwhile, haven assets have rallied. Gold jumped, and the euro, the Swiss franc, and the Japanese yen all strengthened significantly. The euro rebounded sharply from an intraday low against the dollar on Thursday after the tariff ruling was paused. The EUR/USD pair fell as low as 1.1210 before surging to 1.1353 as of 3:11 am CEST on Friday. Gold futures also swung higher, climbing to $3,321 per ounce from an intraday low of $3,269 on Thursday.
New York Post
3 days ago
- Business
- New York Post
Trump needs Congress to save his tariffs, and his trade strategy
On Wednesday, President Donald Trump's 'Liberation Day' collided with deliberation day in the courts, and it did not go well. The Court of International Trade ruled that the President lacks the authority to impose his massive tariffs worldwide. But all is not lost for Trump's tariffs. The three-judge panel held that the International Emergency Economic Powers Act of 1977 (IEEPA) does not give the president 'such unbounded authority.' Advertisement While some have criticized the court as a 'judicial coup,' it is a well-reasoned and good-faith decision from judges appointed by Presidents Ronald Reagan, Barack Obama, and Trump. While the court, in my view, should have issued a stay pending appeal, a wide array of experts have questioned the authority under the IEEPA, which is designed to address a national emergency. The authority does not mention tariffs and has never been used for tariffs. There's a good chance the Supreme Court upholds the ruling. The Trump administration is now appealing and pushing for a stay to prevent this ruling from having a disruptive impact on the nearly completed array of trade deals. Advertisement Rejecting Trump's authority under IEEPA does not mean he lacks all authority for tariffs. The administration is correct in arguing that Congress has repeatedly deferred to presidents on tariffs, granting them sweeping authority. For example, the ruling does not affect Trump's 'sector tariffs' under the Trade Expansion Act, which impose 25% levies on steel, aluminum, and auto imports. Likewise, the court acknowledged that Trump has the authority under Section 122 of the Trade Act to impose tariffs of up to 15% for 150 days to address 'fundamental international payment problems,' including trade deficits. After conducting further investigation into these problems, he can then impose long-term tariffs under Section 232 of the Trade Expansion Act of 1962. Advertisement But Congress may have to act if it wants to allow the Trump administration to continue to use tariffs as a trade strategy. A court just removed the stick Trump used to force other nations to the negotiating table. Absent congressional action, it may even be possible for companies to seek reimbursement for past payments under the Trump tariffs. Both the suspension of tariffs and the risk of reimbursement could exacerbate the current deficit. The revenue from the tariffs was factored into the projections behind Trump's 'Big Beautiful Bill.' Congress will need to demonstrate that it is nimble enough to operate effectively in this fast-paced market. It will also have to decide whether it wants to give Trump time to close his deals. Whether you agree with Trump's gamble or not, we already have chips on the table. Moreover, there is strong support for reciprocal tariffs to match the costs and barriers placed on our goods by other countries. Advertisement Congress has already indicated that it is willing to block Democratic measures to derail the negotiations. Recently, the Senate rejected an effort to undo Trump's tariffs on most U.S. trading partners in a tied vote of 49 to 49 (with three Republican senators voting with the Democrats). Trump may find that his razor-thin margin will not last much longer. Polls indicate that the public is wary of the impact of the tariffs. Many of us view tariffs as a tax on consumers and generally a poor idea. Nevertheless, Trump was right about the market barriers and unfair treatment shown by other countries, including some of our closest allies. The resulting deals will be good for the United States and could represent the most significant move toward open markets in a generation. These are difficult issues, and we need to tamp down the rhetoric. These judges are not the enemy. Neither is Trump. Trump is trying to use every possible law to achieve historic reforms. These judges are trying to guarantee that such priorities do not take precedence over the rule of law. Just as Congress needs to be more nimble, so does the president. He can appeal this case while using less controversial means to maintain the tariff pressure on these countries as we work toward these bilateral trade agreements. In the meantime, the Senate should use its leverage at this moment to not only push the administration for a fast resolution of these trade talks, but far greater reductions in federal spending. Advertisement Trump has shocked a long-comatose system in Washington. However, it has been more shock than therapy without free trade deals and deficit reductions. Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and the author of 'The Indispensable Right: Free Speech in an Age of Rage.'
