Goldman and Morgan Stanley cautioned that a recent trade court decision blocking President Trump’s emergency tariffs may only delay the reimposition of duties, as the administration retains multiple other authorities to levy import taxes.
The ruling halted 6.7 percentage points of levies under emergency powers, but tools under Sections 232, 301 and 122 remain available for swift or broad application.
Market Overview:- Court blocked 6.7 percentage points of emergency-based tariffs
- Administration can deploy Section 232, 301 or 122 statutes
- White House not moving immediately, but retains authority
- Section 232 can hit steel, aluminum and autos on national security grounds
- Section 301 investigations allow country-specific duties, slower but broader
- Section 122 permits up to 15% tariffs for 150 days
- Administration likely to appeal and consider patchwork tariff approach
- Up to $200 billion in annual tariff revenue still at stake
- Trade-policy uncertainty remains a major overhang for markets
- A U.S. trade court blocked a significant portion of President Trump's recent emergency-based tariffs, ruling the administration overstepped its legal authority.
- This decision provides immediate, albeit potentially temporary, relief to sectors hardest hit by these specific trade disruptions, such as automakers, banks, luxury brands, and semiconductor makers.
- The court's ruling affirms that Congress holds the primary power to regulate commerce, placing a legal check on the president's unilateral authority to impose broad tariffs under emergency powers.
- This ruling could temporarily reduce the U.S.'s average effective tariff rate, offering some respite to businesses and consumers who bear the cost of these duties.
- The legal challenge may force the administration to use more traditional, and often slower, procedural avenues for imposing future tariffs, potentially leading to more deliberation.
- Financial institutions like Goldman Sachs and Morgan Stanley caution that the court's decision may only offer a temporary delay, as the Trump administration retains multiple other legal authorities to levy import taxes.
- The Trump administration immediately announced its intention to appeal the ruling, signaling prolonged legal battles and continued uncertainty regarding the tariffs blocked under emergency powers.
- Significant existing tariffs, such as those on steel, aluminum, and autos under different statutes, and some prior tariffs (e.g., on certain Chinese goods), are not affected by this specific court ruling.
- Analysts expect the administration will likely consider a "patchwork tariff approach" or utilize alternative statutes to reimpose similar duties, meaning trade-policy volatility is far from resolved.
- With substantial annual tariff revenue potentially at stake from the broader tariff strategy, the administration has a strong incentive to find ways to maintain or recover these duties.
- The ongoing uncertainty surrounding tariffs and potential new levies under different authorities will remain a major overhang for markets, likely causing businesses to remain cautious about investments and strategic decisions.
- The administration could also seek to ignore the ruling or push for legislative changes to bolster its tariff authority, further extending the period of trade policy instability.
Beyond emergency authorities, the White House can stitch together alternative tariffs to maintain leverage in negotiations, underscoring that trade-policy volatility is far from resolved.
With roughly $200 billion in annual tariff revenue at stake, both banks forecast that the administration will find ways to recover much of the blocked duties, keeping markets on edge.
