Well, isn’t this funny. I had an entire podcast written out about the big beautiful bill and how is was going to lead to an inflationary spiral down the road because the debt would have increased by over 10%. Which doesn’t sound bad except that would mean at least $4 T on a $37 T deficit. I will not get used to these big numbers. They are an aberration just as candy bars that cost more than a quarter. However, when the Japanese bond market decided to give us a glimpse into hell, I sat down to write that instead. The Japanese bond market is the second biggest in the world, half owned by the Bank of Japan. If they have trouble who knows what the ramifications could be. Do they allow inflation, do they allow the bond market to fail wrecking life insurance companies. Do they repatriate their money from around the globe and try and fight it? That would cause massive selloffs including the US bond market because the Japanese are the largest holders of US treasuries. The spiderweb of disasters might still unfold, but just as I was ready to post the options that the Japanese might have, what are their government leaders thinking, and what does it mean for you? This rolls across my CNBC wire…Court strikes down Trump reciprocal tariffs.
Whoa!
Garfield Reynolds from Bloomberg hit it right on the head is that this blows a huge hole into the big beautiful bill passing since tariff revenue was one of the few items to offset the huge deficit impact. The Dow Jones jumped 1% on the news while the Nasdaq was up 1.6%. Equities have to think this is positive for growth since it is in effect a tax cut under another name. This will also likely be strong for labor and that means the Fed will have stronger growth prospects, a stronger labor situation and do they need to raise rates? Will the good time wagon of the past few years roll on? Who knows, but I think we need to think about this from a couple different angles.
Trump is going to be pissed. Does he ignore the law. We have done so with TikTok because it is popular and lowering everyone’s tariffs is bound to be popular, but on the other hand Trump’s favorite word in the English language is tariff. What a weird thing to say. My favorite word is makeupsex? That’s one word and a question for those of you paying attention at home. If Trump ignores the law, then what happens? Could the judges hold him in contempt of court? Would he try a different authority? This is from Lora Kolodny from CNBC, “A federal court ruled Wednesday that President Donald Trump exceeded his authority with his reciprocal tariffs, dealing a blow to the president’s economic plan that has roiled markets.
The judges wrote that the International Emergency Economic Powers Act, a 1977 law that Trump invoked to justify the tariffs, does not actually give the president the power to implement the sweeping duties initiated last month.
“The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs. The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders,” the judges wrote.
The suit was brought on behalf of five U.S. businesses that rely on imports to some extent. The judges said that Trump’s tariff orders were “unlawful as to all,” not just those plaintiffs’ companies, so there would be “no question here of narrowly tailored relief.”
The judges ordered the challenged tariffs to be “vacated and their operation permanently enjoined.”
Lawyers for the White House could appeal the matter, but the case and decision put President Donald Trump’s economic agenda under pressure.”
So these are the IEEPA tariff authorities and this falls as an economic powers act. First of all, I applaud our governmental system for working, provided Trump does take the tariffs off. This is what checks and balances are for. I have been saying for a while that I don’t want any one person to have the power to pick a company and put a tariff on them like Trump tried to do to Tim Cook or change economic policy at the whim of a waking up on the wrong side of the bed. Businesses need to be able to plan their businesses and any interference which should be much less should be well established with long runways where companies can decide investment decisions, long term staffing plans, and capital structure planning. This on again off again game of red light green light Trump has been playing is as juvenile as he is.
Now this is reciprocal tariffs not all tariffs which include the fentanyl tariffs which were originally on Canada, Mexico, and China. I didn’t see anything yet on how those tariffs might be impacted because he was using a different legal authority for those regarding trafficking I guess. So the checks and balances worked? 5 businesses whose livelihoods were affected by government overreach went to court and won. I think we all need to celebrate a little. This doesn’t happen in China. Hurray for the old stars and stripes.
So Musk has went back to his businesses that don’t sell cars very fast anymore, rockets that blow up, and self driving cars that don’t self drive and Doge might have gotten us 15% of the deficit? Maybe? We will take it. It was looking like tariffs might have been able to get us $200-300 billion, maybe a touch more depending on the final rates and how many things were purchased under the tariffs or used substitutions including domestic substitutes.
We might have been able to close 20% of the deficit and now that revenue is under review? Oh boy, so now what? Does the Senate say absolutely not with the big beautiful bill. Senators like Ron Johnson of Wisconsin had already came out and said they had the votes to block the current version which makes me nervous that they will just stuff more pork into it.
Here is a crazy result as well. Let’s say the big beautiful bill doesn’t get passed as I once said could be on the table to balance the budget deficit. It would be one of the largest tax hikes in history. Trump would be able to claim that he wanted tax cuts but the Congress wouldn’t pass his bill and he would get a ton of revenue that way. Tariffs good bye, income taxes say hello.
All that pomp and circumstance and posterboards and bad math were all for nothing? How does poor England feel? I bet they are unhappy that they signed a new agreement even though we were running a trade surplus against them. Only deal we made was with a country that we are ripping off, looting you might say. Oh that is rich.
As we discussed a few weeks ago, poor Tino Muratore, the general manager of Worldlawn Power Equipment in Beatrice, Ne. He paid way too much for those lawnmowers. How is that fair to him? There are hundreds of people that have been stressed out, paid too much, made plans and now we are going back to normal? This is ultimately what the legacy of Donald Trump will probably be. He caused volatility in every way. He was a disruptor.
So does Congress go out on its own and try a new bill? What are we going to do with the debt ceiling? That was supposed to be rolled into this bill? What might happen next?
This is from ZeroHedge, “The ruling can now be appealed by the Trump administration in federal court.
“Foreign countries’ nonreciprocal treatment of the Unites States has fueled America’s historic and persistent trade deficits. These deficits have created a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute. It is not for unelected judges to decide how to properly address a national emergency. President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness,” said White House Spokesman Kush Desai.
The White House has filed a notice of appeal with the US trade court.”
It has weakened our defense industrial base, forgive me if if don’t quote this perfectly from the Newsroom, but on defense spending he said where we spend more than the next twenty-six countries combined, twenty-five of whom are allies. I think our defense department is just fine and as fat as ever. Let’s pump the brakes Kush.
Speaking of pumping the breaks, I’m sure there are several nations that are negotiating trade deals in good faith. What happens now? Will they get a new deal? Will Apple stop moving so much of its iPhone production to India? Why did Elon Musk thank Donald Trump after he said you can have a big bill or a beautiful bill nut not both? Why did he say that the legislation was going to undermine Doge’s efforts? Why? Why do markets think this is good? Why? Why Why? Would somebody tell me what the hell is going on in America? On again off again? This is like Steinbrenner and Billy Martin.
Sincerely Yours,
C Thomas Printer
Also born on this date… the logo, Mr. Jerry West.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.
https://www.cnbc.com/2025/05/29/court-strikes-down-trump-reciprocal-tariffs.html