London — The US Court of International Trade has blocked Trump blanket tariffs. By restoring tariff-setting power to Congress, the judges have handed the administration an immediate setback, and the White House filed an appeal shortly after, signalling that the dispute is likely to grind through several judicial tiers before any clarity emerges, which is likely to take days.
Markets welcomed the decision as a temporary reprieve from what had been shaping up as an additional and inflationary tax effect global supply chains. Asian equity benchmarks advanced between 1 and 1.5%, S&P 500 futures gained roughly 1.5%, the US Dollar traded north of 100, and gold slipped modestly. In effect, a single legal headline removed a layer of risk premium that had been weighing on sentiment since early April.
Yet the uncertainty premium remains very much alive. Every forthcoming court milestone carries the potential for fresh headlines. This time it will only demand specialised legal analysis to separate noise from signal.
Implied volatility is therefore likely to stay elevated in technology and other tariff-sensitive sectors, though broad-based tariffs ultimately bleed into every corner of the equity market.
Should the ruling stand, a strategic rotation could gather pace. Cyclical sectors that bear the brunt of trade policy would see room for multiple expansion.
At the same time, the erosion of tariff risk would damp inflation expectations just as real yields are edging higher, tilting the near-term balance of relative returns toward equities over bonds.
That combination, reduced cost pressure alongside US growth, has historically lent support to a stronger dollar, and the initial reaction in currency markets reflects that pattern.
Even so, fiscal anxieties lurk in the background. Persistent concern over the US deficit, brought back into focus after Elon Musk’s abrupt departure from DOGE and as the ‘big beautiful bill’ advances, could put upward pressure on the long end of the Treasury curve and revive demand for duration hedges. In that scenario, equity rerating born of tariff relief would have to contend with a higher discount rate.
In short, the court has given markets a halftime breather rather than a full time resolution. Until higher courts render a definitive judgment, investors would be prudent to treat the current rally as a tactical reset, one that exposes where residual short positions remain and tests the true depth of risk appetite, rather than the start of a durable trend.
As strategists, we do what we do best and interpret price action and market sentiment to chart the road ahead, rather than getting drawn into legal details.
The muted, to some extent, follow-through across asset classes suggests that, for now, participants are content to cover shorts but remain reluctant to chase longs on the back of the Court of International Trade headline.
*Ahmad Assiri Research Strategist at Pepperstone
