The U.S. Supreme Court started its review of President Trump’s tariffs. The lawyer for the government began its argument.
U.S. Solicitor General D. John Sauer said that the duties are not revenue-raising tariffs. He characterized them as being “only incidental.” The lawyer argued that tariffs are for regulation and are not taxes. The argument contradicts the White House’s position that the government collected hundreds of billions from tariffs. It is forecasting this to grow by the end of the year.
Unfortunately, tariffs behave like import taxes that the government imposes on imported goods.
In reaction to the court case, stock markets rose. The Dow Jones (DJI), Nasdaq (QQQ), and S&P 500 (IVV) bounced back from Tuesday’s 2% stock sell-off. Still, the Dow’s 225-point gain suggests that the market is pricing in the court to rule tariffs as illegal. That ruling would help increase trade. Consumers would benefit, since they end up paying at least some of the tariffs.
Walmart (WMT) and Costco (COST) stock did not move by much. They are on a year-long uptrend and trade at a premium. Firms like Lululemon (LULU) and Deckers Outdoor (DECK) rose slightly. The removal of tariffs would give suppliers clarity. They may resume importing goods and set prices for customers that stimulate demand.
The bond market slumped. The iShares 20+ Year Treasury Bill ETF (TLT) lost a percent to close at $88.96.
