Interesting times

With about $3.3 trillion of goods exports, the US Court of International Trade just relieved American businesses of $330 billion of import taxes but of course where this ends up on appeal remains to be seen and the White House can use other tariff tools such as Section 232, Section 122 and Section 301 to replace some of what was struck down.

It will certainly be interesting what comes of the current trade negotiations going on without the threat of tariffs for now. Hopefully we can get some easing of trade barriers without that tariff stick anyway.

Informationally, according to their website the US Court of International Trade was "established under Article III of the Constitution, has nationwide jurisdiction over civil actions arising out of the customs and international trade laws of the United States."

The bottom line of the Court on this, "The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA (International Emergency Economic Powers Act) to regulate importation by means of tariffs. The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders."

Some other tidbits from the decision, "Because of the Constitution's express allocation of the tariff power to Congress, we do not read IEEPA to delegate an unbounded tariff authority to the President. We instead read IEEPA's provisions to impose meaningful limits on any such authority it confers."

"IEEPA require more than just the fact of a presidential finding or declaration: The authorities granted to the President by section 1702 of this title may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared for purposes of this chapter and may not be exercised for any other purpose. This language, importantly, does not commit the question of whether IEEPA authority 'deal's with an unusual and extraordinary threat' to the President's judgment. It does not grant IEEPA authority to the President simply when he 'finds' or 'determines' that an unusual and extraordinary threat exists."

Finally from me on this, "Section 1701 is not a symbolic festoon; it is a meaningful constraint on the President's discretion. It sets out 'the happening of the contingency on which IEEPA powers depend,' and the court will give it its due effect." https://www.cit.uscourts.gov/sites/cit/files/25-66.pdf

With this legalese behind us, what does it mean for markets? Equities deservingly are rallying but have been since the April 9th tariff cool down. Bonds are selling off and the US dollar can't seem to get out of its own way, basically flat this morning. I think the thought on bonds is that the court has taken the foot off international commerce and maybe why yields are higher with the 10 yr yield back above 4.50% and the 30 yr yield above 5%. Also, yields are up again in Asia and Europe. I remain bearish on duration of anything past 3 years.