The Supreme Court cancels a set of tariffs imposed by Trump
The ruling stirs a new wave of uncertainty concerning refunds and trade policy
The decline of Treasury bonds in New York and the stabilization of futures in Asia and the fall of the dollar
Khaberni - Far from being a source of relief, the ruling by the U.S. Supreme Court to cancel tariffs imposed by President Donald Trump has introduced more risks and uncertainties about trade policy, U.S. debt, and the dollar.
The court did not make any decisions regarding refunds, leaving the door open to the possibility of a deficit of about $170 billion in U.S. public finances. Trump's hasty rush to impose alternative tariffs shocked Europe in addition to creating a new state of confusion about trade policy.
The dollar fell on Monday in Asian trading, particularly against safe-haven currencies such as the Swiss franc and the yen, while U.S. Treasury bonds struggled amid market challenges in dealing with risks threatening the financial situation and absorbing the effects of inflation.
The most evident conclusion is that the alternative tariffs imposed by Trump are lower and should relieve price pressures in the short term. However, the court also limited his powers, which could have unpredictable consequences on the markets and the economy.
Analysts at ING noted in a briefing "Uncertainty has returned, and considering the latest display of strength by European leaders, the risk of escalation is now greater than it was a year ago".
For Treasury bonds, one of the risks involves lawsuits demanding tariff refunds, likely to take months in lower courts.
Estimates suggest that the revenues collected so far from tariffs exceed $175 billion, a modest percentage of the total expected revenues of over five trillion dollars. However, their refund could force the U.S. government to issue more bonds.
Dan Selick, head of short-term debt and liquidity at Janus Henderson, said that refunding the tariffs would mean an increase in debt issuances.
Yields of U.S. Treasury bonds for 10 years rose slightly to 4.1% on Friday, but have fallen from their peak exceeding 4.5% in mid-2025, in line with signs of slowing inflation and expectations of the Federal Reserve (the central bank of the U.S.) cutting interest rates.
Today, Monday, the yields of standard 10-year bonds dropped 1.4 basis points during the day to 4.071%, while the yields of bonds for 30 years dropped one basis point to 4.716%.
Alberto Conca, the investment director at LFG+ZES.T in Lugano, Switzerland, said "Markets are currently focused on the short-term impact, namely the fall of inflation and faster rate cuts".
He added "I think this is a somewhat limited perspective because it involves an increase in the already substantial deficit, so the yield curve should see a greater degree of steepening, given that the U.S. government's public finances are, in fact, out of control".
* Uncertainty surrounding revenues
The Congressional Budget Office estimates that the tariffs imposed by Trump would yield about $300 billion annually over the next decade for the world's largest economy.
The alternative tariffs imposed by Trump, which are 15%, will only last for 150 days, and it is not yet clear when exactly they will be imposed or on whom. Some countries, including Britain and Australia, were subject to a 10% tariff, while higher rates were imposed on many Asian countries.
Jean Goldman, investment director at Cetera Investment Management, said "The bond market faces the greatest source of concern", indicating the possibility of increased issuances if the U.S. government needs to refund the tariffs alongside financing other stimulus packages.
However, the market reaction was not significant, and there is an opinion that long-term repercussions could be avoided.
Morgan Stanley analysts belong to the team that believes the debt market will not be overly concerned with the fiscal deficit because Trump will find alternatives to the tariffs and because any potential additional funding will be through short-term Treasury bills.
Trump may also not be able to fulfill his desire to give every American two thousand dollars from tariff revenues, which would have added some inflationary pressures.
Yet, there is another wave of uncertainty surrounding policies and revenues. So far, the dollar's response has been to continue its losses, decreasing about 0.4% against the euro today, Monday, bringing the total drop to nearly 12% since the start of Trump's second term in early 2025.
Forecasts depend on how traders deal with this chaos. Barclays analysts said that the Supreme Court's decision could be seen as an example of the effectiveness of the checks and balances principle, which might alleviate part of the risk premium on U.S. assets and the dollar. Others focus on inflation.
Eddie Gabor, CEO of Key Advisors Wealth Management in Delaware, USA said "When you have this much liquidity and you reduce tariffs, it all feeds growth leading to higher interest rates".
He added "These factors could also lead to accelerated inflation in the coming months. I believe the bond market senses that".
