00:00This latest headline coming in from the Supreme Court, global tariffs struck down by the Supreme
00:05Court. Yep, so today was going to be the fate of whether or not Trump's IEPA tariffs, which about
00:0960 to 75 percent of the tariff policy right now in the United States is based off of, and the
00:14Supreme Court making this decision, a redhead across the Bloomberg terminal, Trump's global
00:17tariffs are struck down by the U.S. Supreme Court. So this means that the Supreme Court has decided
00:23that using IEPA, which this administration has done when it comes to the fentanyl tariffs and
00:27it comes to reciprocal tariffs for other countries using IEPA is illegal. Now, given that we
00:33are in the financial community, a lot of people may be thinking, does this mean we will not
00:36have tariffs? That is not the case. This administration has talked about Plan B. Now they're going to
00:42enact tariffs using other policies via USTR and the Commerce Department. But using IEPA,
00:48the Supreme Court is saying that this was illegal. Very interesting considering how they've been
00:54using these tariff-free funds. And also the president is going to give a massive address
00:58next week. It's the State of the Union. A lot of Supreme Court justices go to the State of the
01:03Union. You can imagine this is going to be an incredibly difficult time for this president
01:08considering this was paramount, a huge policy for his administration. And not only do they go to the
01:15State of the Union, I believe often they're sitting in the front row too. So this might be a little
01:19bit
01:19more awkward. Anne-Marie, the noise we were kind of getting from the Supreme Court, is it surprising
01:25that they struck it down? Or did it seem like we were heading in this direction?
01:29Well, there was a lot of individuals who thought potentially this is just too big.
01:32It was too big of a policy to fail and that they would uphold the president's use of IEPA.
01:38But others were saying if you look at IEPA, which has not been used in this way really ever when
01:44it comes to tariff policy, they were saying this wasn't the best legal justification to enact
01:49these tariff policies. IEPA is supposed to be used for emergency purposes. Now, some were saying
01:55maybe there would be a split decision. You use IEPA and call the fentanyl tariffs an emergency
02:00issue, but not reciprocal. And now the Supreme Court is basically saying using IEPA, that is not
02:08legal. So this is, you know, really can't over explain, emphasize how big of a blow this is
02:18for the Trump administration. Let's just get a quick check on how markets are reacting to this.
02:23And Anne-Marie, I know you probably want to look through the decision a little bit more too. So first,
02:27here's your S&P 500. The initial reaction is one of a spike. We were little change. Now we're up
02:33by
02:33one-third of one percent. Again, that's not huge gains. We'll see what some of these individual
02:38companies are doing, especially those who have joined a lawsuit in order to get tariff refunds.
02:44Lululemon, here's a great example of it. That's up four percent this morning. Consumer discretionary,
02:50which had been falling, that is now up one percent. Communication services, still the best sector.
02:56There you go. Let's take a quick look at what bonds are doing this morning too. They are moving higher,
03:02but recall they had been moving higher after PCE yields, that is. PCE had been moving higher
03:08given we had, or the yields had been moving higher given that PCE was largely hot. So your two-year
03:14yield, that moves in up by nearly three basis points. Your 10-year yield, that stands at 408. That
03:21also moves higher by two basis points. So again, the reaction from this has been higher, four-year yields
03:27across the curve. And meanwhile, an equity market that's rebounding now being led by
03:32consumer discretionary companies. Williams-Sonoma, those shares up four percent. eBay, up three
03:37point six percent. Nike, those shares also up three point three percent. So again, a lot of these
03:42consumer tariff exposed companies moving higher. Anne-Marie Hordern is still around the table with
03:48us. Anne-Marie, what does, I mean, maybe we don't know at this point, but there has been this list
03:53of companies who have joined lawsuits in order to try to claw back some sort of tariff refund from
03:58IEPA. Right. Because actually, if you didn't join the lawsuit and then you had a decision like this,
04:02you wouldn't actually be in the queue preparing to potentially or even be legally allowed to get
04:08the rebate back in terms of the tariffs that these companies have been paying. So that is why you are
04:14seeing a lot of companies like Nike on your screen just shooting up right now, the stock. But it is
04:20important to take a step back and remember that tariffs are going to be here to say, yes, for the
04:25Trump
04:25administration, they just will not be using IEPA. IEPA gives an incredible amount of flexibility to
04:30this administration to quickly put, honestly, tariffs on tariffs off basically overnight.
04:35They're going to have to go through potentially investigations or they're going to have to use
04:39other authorities that you can enact tariffs, but potentially only for a shorter amount of time
04:45or have certain limits then. So there now will be limits on this administration, but they're going
04:49to get to similar tariff rates when it comes to countries that have done deals and also just broadly
04:55when it comes to the fentanyl tariffs. They're going to have to use other avenues. But this is
05:00a big blow for the administration that has really used IEPA the entire year to enact their entire
05:07trade policy. And it's that's all of that is so important to keep in mind, Anne-Marie, when we look
05:11at this market reaction, how much of it will last? Do you start to get an unwind of anything we've
05:15seen
05:16given the ability, as you've been describing, to enact tariffs in other ways?
05:20Thank you, Anne-Marie.
Comments