Back in April, I was in Washington for the prestigious World Bank Group/IMF Spring Meetings and attended a basketball game with an old friend.
He runs one of America’s most prominent lobbying and communications groups. Like many of his countrymen, he was deeply worried about how Donald Trump’s tariffs on world trade had been wreaking havoc since being imposed on so-called ‘Liberation Day’ that month.
He confidently told me that, sooner or later, federal courts would strike down the President’s punitive levies on foreign imports. If Trump wanted to push through his radical economic upheaval, he would have to pass legislation through Congress.
The question on everyone’s lips wasn’t if the judiciary would act – but when. Now we know. Late on Wednesday, the US Court of International Trade blocked Trump’s sweeping tariffs, ruling that he had overstepped his authority with his audacious use of emergency powers to force them through.
Then, last night the tariffs were reinstated by the federal appeals court – for now. But this will do little to calm nerves.
Donald Trump billed his tariffs as the US’s economic salvation. They were meant to raise $600billion a year, helping to pay for his ‘big, beautiful’ tax-cut bill passed by Congress
For weeks since April 2, volatility has whipsawed the world’s financial systems, sounding alarm bells for US businesses.
First, the President imposed swingeing duties on Canada, Mexico and China in part over their perceived failure to halt illegal immigration and smuggling of the drug fentanyl.
Then he unveiled brutal ‘reciprocal’ tariffs on virtually every other trading partner – from the almost uninhabited Marshall Islands in the Pacific to Britain and the EU.
Following this week’s sensational court rulings, the markets have been offered some much-needed relief. But business leaders remain paralysed by uncertainty and confusion, unsure of what will happen next.
The grim truth is that the trade war is far from over and the chaos is certain to continue – or worsen.
The White House has already pledged to appeal the court’s decision, taking aim at ‘unelected judges [deciding] how to properly address a national emergency’.
The panic in the administration is palpable as a once-resilient economy risks being plunged into fresh crisis.
The bloated budget deficit and soaring national debt recently provoked leading agencies to downgrade America’s ‘AAA’ credit score – the highest possible – to ‘AA1’ last week.
The dollar is plummeting on foreign exchange markets and the Treasury bond market risks a Liz Truss-style meltdown.
So what happens next?
Trump billed his tariffs as the US’s economic salvation.
They were meant to raise $600 billion a year, helping to pay for his ‘big, beautiful’ tax-cut bill passed by Congress a week ago.
Now the courts have blown a hole into his rosy forecasts – and the only certainty is that Trump will throw a grenade right back.
He may have won a temporary reprieve with the tariffs being reinstated on appeal last night, but if that ruling is later successfully challenged, America could face a fresh constitutional crisis as a President careless of the rule of law seeks ever-more autocratic powers to effect his goals.
Halting the tariffs may not bring about the certainty markets crave. Instead, it could presage a further bloodbath in asset prices – and a new firestorm in the White House.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .