The Trump administration is bracing for a potential legal setback that could undermine its tariff strategy, analysts at Yardeni Research highlighted in a note this week.
The firm stated that the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., may soon rule that President Donald Trump lacks the legal authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA).
Yardeni noted that concern was evident in an August 11 letter from two of the administration’s top lawyers to the court clerk, filed after oral arguments on July 31, where judges reportedly pressed the government on the tariffs’ legality.
The letter warns that “suddenly revoking the President’s tariff authority under IEEPA would have catastrophic consequences for our national security, foreign policy, and economy,” adding it could “lead to a 1929-style result.”
While Yardeni said the conclusion “may be exaggerated,” the fallout would still be “messy,” with foreign governments potentially ignoring trade agreements and companies seeking tariff refunds from the Treasury.
Trump has promoted tariffs as an “External Revenue Service” to help cut the federal deficit.
Customs duties hit a record $157 billion over the 12 months through July, and Trump has aimed for a base tariff of 10%-15% on all U.S. trading partners, potentially yielding over $500 billion annually.
Losing the case could raise bond yields and pressure stocks due to renewed policy uncertainty, according to Yardeni.
The firm cited Capital Alpha Partners’ Jim Lucier, who expects a Federal Circuit decision by late August or September.
A unanimous ruling against the administration could give the Supreme Court cover to avoid the case and decline a stay that would keep the tariffs in place.
Source :
https://www.investing.com/news/economy-news/will-trumps-tariffs-get-tariffried-by-the-courts-4193347
