US Stocks Slip on Latest Trump Tariff Uncertainty

US stock futures took a minor hit as renewed uncertainty surrounding tariffs gripped investors and caused a period of market confusion. This followed a federal appeals court’s decision to temporarily reinstate Donald Trump’s contentious global trade levies.

Contracts linked to the Dow Jones Industrial Average fell by 0.1%. Elsewhere, the S&P 500 and Nasdaq 100 futures declined by 0.2% and 0.3%, respectively. The market reaction came as the drama around Trump’s broad use of import taxes continued to play out in the courtroom.

Only a day after a trade court invalidated large portions of the tariffs – deeming their method of implementation unlawful – a federal appeals court paused that ruling. The Trump administration now has until 9 June to present its case. White House officials have indicated they are prepared to take the matter all the way to the Supreme Court.

Initially, a ruling from the US Court of International Trade had struck down many of Trump’s tariffs. This included those aimed at China and blanket import duties on various global goods. However, some measures, such as those affecting steel, aluminium, and specific Chinese products, were left untouched due to their foundation in separate legislation.

The appeals court, which has authority over the trade court, granted a temporary stay. This ensured that the status quo is maintained while legal proceedings continue. The White House responded quickly to the ruling. It said it would explore alternative legal routes to enforce the tariffs should the courts ultimately block them.

The administration has been clear that these court decisions won’t necessarily derail its trade strategy. Some state officials believe the original trade court ruling constitutes judicial overreach, with some calling for faster intervention from higher courts.

How has Trump responded to events?

Donald Trump expressed his strong opinions on the matter via social media. He denounced the lower court decision and urged the Supreme Court to overturn it swiftly, describing the ruling as a threat to the nation’s economic security.

Posting on his Truth Social platform, the president said: “Hopefully, the Supreme Court will reverse this horrible, Country threatening decision, QUICKLY and DECISIVELY. Backroom ‘hustlers’ must not be allowed to destroy our Nation!”

What happens next with Trump’s tariffs?

When it comes to the issue of Trump’s tariffs, the future is unclear. Peter Navarro, a key trade adviser to the president, has hinted at continued action regardless of legal hurdles. He has gone on record as saying the administration intends to pursue the policy through alternative routes. This plan of action would be implemented regardless of the outcome of existing court challenges.

As of today, no court has overturned tariffs introduced by Trump on cars, steel, and aluminium. These measures were justified on national security grounds under Section 232 of the Trade Expansion Act of 1962. Consequently, this legislation could be used again to broaden tariff coverage to other sectors, including semiconductors and lumber.

The president has a number of different options available to him. He may decide to revisit Section 301 of the Trade Act of 1974. He previously relied on this act to introduce tariffs against China during his first term. 

However, another lesser-known statute from 1930, Section 338, provides the authority to impose tariffs of up to 50% on goods from nations that are seen to discriminate against the United States. Although this law hasn’t been used in decades, it remains a card that Trump could play.

For now, the primary focus appears to be on legal challenges to unfavourable court decisions. Many observers expect the dispute to eventually reach the US Supreme Court, suggesting that the broader battle over tariff powers is far from over.

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