The 'major questions' Supreme Court hurdle that could stand in the way of Trump's tariffs

Economic

China–U.S. Trade War

Summary:

Trump’s global tariffs may face a Supreme Court challenge under the "major questions doctrine," which limits executive power on major economic issues without clear congressional authorization—posing a serious legal hurdle.

Are President Trump's global tariffs of "vast economic and political significance"?

The answer could make or break the administration's chance to keep the president's "Liberation Day" tariffs in force as legal challengers try to undo them — especially if the dispute eventually reaches the Supreme Court.

The nation's highest court has made it clear in recent years that it is willing to apply a test known as the "major questions doctrine" to rein in the executive branch from usurping power vested in Congress.

That doctrine, solidified with the help of Trump's hand-picked conservative judges, limits the authority of federal agencies to take action on issues of "vast economic and political significance" except where Congress has explicitly authorized the action.

It got a formal nod from the high court in two cases that were decided against President Biden during his time in office. And now it could become a hurdle for the current president if the current lower court fight over Trump's duties reaches the Supreme Court as expected.

Last week, the US Court of International Trade in New York City struck down many of Trump's tariffs without directly applying the major questions doctrine, but on Thursday, the US Court of Appeals for the Federal Circuit in Washington, D.C., allowed Trump's duties to temporarily stay in place while legal arguments continue.

On Monday, the small businesses that initially challenged Trump's tariffs before the US Court of International Trade filed arguments with the trade saying the stay should be lifted. They reiterated a finding of the trade court, saying that "any interpretation" of IEEPA — the 1977 law Trump used to support his duties — "that delegates unlimited tariff authority is unconstitutional."

Judges considering the "major questions doctrine" will have to decide if any president can unilaterally levy import duties to address conditions that the president characterizes as a US emergency — as Trump has cited as justification for many of his duties.

The administration is arguing that the major questions doctrine is irrelevant to matters of national security concern, where a president has extreme flexibility to exert power. It has also argued that it limits actions taken by federal agencies and not actions of the president.

Trump specifically cited the International Emergency Economic Powers Act of 1977 (IEEPA) as authority for many of his tariffs. That law states that during a national emergency, the president can regulate economic transactions, including imports, in order to respond to an "unusual and extraordinary threat" from abroad.

Congress passed the IEEPA to restrict presidents from overstepping a 1917 World War I-era law known as the Trading with the Enemy Act (TWEA). The act, which regulates US transactions with enemy powers, allowed the president to exercise broad economic power during wartime and during national emergencies.

The president cited IEEPA in an executive order issued Feb. 1 when he imposed tariffs on goods from China, Mexico, and Canada by declaring that an influx of illegal immigration and drugs into the country posed a national emergency.

Trump also cited the law on April 2, so-called "Liberation Day," when he announced "reciprocal" tariffs on many countries around the world.

University of California Davis constitutional law professor Aaron Tang called the tariffs a textbook case for application of the major questions doctrine.

"IEEPA has never [been] used before to impose tariffs," Tang said. "So if the doctrine means anything, and if it applies neutrally, no matter who the president is, it will apply here."

It's possible, though unlikely, that a court could avoid the major questions doctrine in deciding the challenger's claims, Tang said.

But to rule in Trump's favor, he said, judges would have to grapple with it to explain why it doesn't apply or is satisfied, given that the US economy is at stake.

"The tariffs are way more economically significant than any of the Biden administration policies," he said.

In 2022, the Supreme Court, in a 6-3 ruling dominated by the court's conservative majority, used the major questions doctrine to find that Biden's EPA lacked clear congressional authorization to regulate certain greenhouse gas emissions.

A year later, the court held that Biden's secretary of education lacked clear authority under the HEROES Act to forgive $400 billion in student loan debt. Like the EPA case, the court said Biden's debt relief regulation was so major that it would need explicit authorization from Congress.

"President Biden and his administration took these really bold actions," Tang said. "The Trump administration, just like the Biden administration, has said, 'I'm just going to do it all by myself.'"

Trump's challengers, he added, have a "very strong argument" that the duties are not authorized by Congress.

Source: finance.yahoo

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Manuel

Economic

China–U.S. Trade War

Alarm over China's stranglehold on critical minerals grew on Tuesday as global automakers joined their U.S. counterparts to complain that restrictions by China on exports of rare earth alloys, mixtures and magnets could cause production delays and outages without a quick solution.

German automakers became the latest to warn that China's export restrictions threaten to shut down production and rattle their local economies, following a similar complaint from an Indian EV maker last week.

China's decision in April to suspend exports of a wide range of critical minerals and magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.

The move underscores China's dominance of the critical mineral industry and is seen as leverage by China in its ongoing trade war with U.S. President Donald Trump.

Trump has sought to redefine the trading relationship with the U.S.' top economic rival China by imposing steep tariffs on billions of dollars of imported goods in hopes of narrowing a wide trade deficit and bringing back lost manufacturing.

Trump imposed tariffs as high as 145% against China only to scale them back after stock, bond and currency markets revolted over the sweeping nature of the levies. China has responded with its own tariffs and is leveraging its dominance in key supply chains to persuade Trump to back down.

Trump and Chinese President Xi Jinping are expected to talk this week, White House spokeswoman Karoline Leavitt told reporters on Tuesday, and the export ban is expected to be high on the agenda.

"I can assure you that the administration is actively monitoring China's compliance with the Geneva trade agreement," she said. "Our administration officials continue to be engaged in correspondence with their Chinese counterparts."

Trump has previously signaled that China's slow pace of easing the critical mineral export ban represents a violation of the Geneva agreement.

Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system. Once in place, the new system could permanently prevent supplies from reaching certain companies, including American military contractors.

The suspension has triggered anxiety in corporate boardrooms and nations' capitals - from Tokyo to Washington - as officials scrambled to identify limited alternative options amid fears that production of new automobiles and other items could grind to a halt by summer's end.

"If the situation is not changed quickly, production delays and even production outages can no longer be ruled out," Hildegard Mueller, head of Germany's auto lobby, told Reuters on Tuesday.

Frank Fannon, a minerals industry consultant and former U.S. assistant secretary of state for energy resources during Trump’s first term, said the global disruptions are not shocking to those paying attention.

“I don’t think anyone should be surprised how this is playing out. We have a production challenge (in the U.S.) and we need to leverage our whole of government approach to secure resources and ramp up domestic capability as soon as possible. The time horizon to do this was yesterday,” Fannon.

Diplomats, automakers and other executives from India, Japan and Europe were urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources told Reuters, as shortages threatened to halt global supply chains.

A business delegation from Japan will visit Beijing in early June to meet the Ministry of Commerce over the curbs and European diplomats from countries with big auto industries have also sought "emergency" meetings with Chinese officials in recent weeks, Reuters reported.

India, where Bajaj Auto (BAJA.NS) warned that any further delays in securing the supply of rare earth magnets from China could "seriously impact" electric vehicle production, is organizing a trip for auto executives in the next two to three weeks.

In May, the head of the trade group representing General Motors (GM.N), Toyota (7203.T), Volkswagen (VOWG.DE), Hyundai (011760.KS) and other major automakers raised similar concerns in a letter to the Trump administration.

"Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras," the Alliance for Automotive Innovation wrote in the letter.

Source: Reuters

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Adam

Cryptocurrency

Bitcoin ETF redemptions have surpassed $1.2 billion over the past three days as Ethereum ETFs marked their 12th day in the green on Monday. Analysts see this as BTC fund investors using recent all-time high prices to take profits while institutional momentum keeps building for ETH.

Bitcoin ETFs saw $268 million in outflows on Monday, according to data from Farside Investors.

"In contrast, Ethereum [funds] recorded $78 million in inflows, marking a 12-day streak totaling $634 million—the strongest accumulation trend since ETF approval," wrote BRN analyst Valentin Fournier. "This flow divergence highlights growing institutional interest in ETH, while suggesting sustained profit-taking on BTC, especially as retail demand stays muted."

Ethereum co-founder and Consensys founder and CEO Joseph Lubin sent another celebratory message about publicly traded gaming company SharpLink Gaming, which completed a $425 million investment round that it will use to fuel its new Ethereum treasury reserve. (Disclosure: Consensys is one of 22 investors in an editorially independent Decrypt.)

"Soon, stablecoins will replace dollars in global settlement. Public markets are beginning to understand this. We're proud to lead a $425 million private placement into SharpLink ($SBET) to bring Ethereum exposure to traditional capital markets," he wrote on X.

It's worth pointing out, though, that SBET has had a rocky start as an Ethereum treasury company. Its share price peaked at $105.59 on Friday, slid to $46.34 yesterday and has now rebounded 29% to $71.60 at the time of writing.

Meanwhile, Ethereum has risen above $2,600 and is currently trading 4.5% higher than it was this time yesterday, according to CoinGecko data. By contrast, Bitcoin has gained 1.8% since yesterday and is currently changing hands for just over $106,000.

Looking at the bigger picture, BRN's Fournier added that market momentum still remains fragile.

"With clear signs of rotational flows into altcoins, we are maintaining a high-risk allocation and tilting further into outperforming assets," he wrote.

But specifically for Ethereum, GSR analyst Carlos Guzman said the roadmap for the layer-1 has been inspiring more confidence among investors.

He alluded to Ethereum Foundation co-director Tomasz K. Stańczak saying that the network will grow tenfold in the next year—a sentiment that was echoed by none other than Ethereum co-founder Vitalik Buterin.

"There was a lot of criticism about [Ethereum] moving slowly and that the layer-2 roadmap not being at the best for it," Guzman told Decrypt. "[The Ethereum Foundation] really shifted their dynamic and communication to prioritize at the L1 layer. Still definitely supporting L2s, but maybe giving more of a little bit of attention as well for the L1."

Source: decrypt

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Adam

Stocks

Britain's blue-chip stocks index ended slightly higher on Tuesday, as defence stocks climbed after the government pledged heavy defence spending and heavyweight energy stocks tracked crude oil prices higher.

The FTSE 100 closed up 0.2%, while the midcap index ended 0.1% lower.

The aerospace and defence sub-index advanced 2.5% to an all-time high after Prime Minister Keir Starmer pledged the largest sustained increase in British defence spending since the end of the Cold War.

Oil major Shell gained 1.7%, while BP added 0.6% as crude oil prices climbed close to 2%.

On the downside, miners of both industrial and precious metals fell more than 1% each as prices of copper and gold came under pressure.

Despite Tuesday's gains, sentiment remained shaky as investors looked out for any developments on the trade front following U.S. President Donald Trump's Friday announcement that he would increase tariffs on imported steel and aluminium from 25% to 50%.

The Organisation for Economic Cooperation and Development (OECD) trimmed its global growth outlook and said the trade war was taking a bigger toll on the U.S. economy than before.

The Paris-based organisation also urged Britain's government to make stronger efforts to reduce borrowing and debt, just days before finance minister Rachel Reeves presents her long-term spending plans.

British equities have rebounded from their April lows, in line with a global shift into riskier assets as Trump's tariff stance softened, with the blue-chip index now sitting about 1% away from its all-time highs.

Chemring Group jumped 6.7% after the defence contractor posted the highest-ever order book for the six months ended April 30. The stock hit a near four-year high.

Education company Pearson dropped 6.6% after Australian peer IDP Education forecast a drop in annual profit.

Drugmaker GSK shed 2.1% after brokerage Berenberg downgraded its rating to "hold" from "buy".

Source: Reuters

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Adam

Stocks

U.S. stock indexes rose on Tuesday, helped by gains in Nvidia and other chipmakers, as investors awaited possible negotiations between the United States and its trading partners for more clarity on Washington's tariff plans.

President Donald Trump and Chinese leader Xi Jinping are set to speak this week, the White House said on Monday, days after Trump accused China of violating an agreement to roll back tariffs and trade restrictions.

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks, according to a draft letter to negotiating partners seen by Reuters.

"Unless there's a deadline, things don't get done, and he's trying to enforce a deadline," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

"If the talks are ongoing, that's good enough."

In May, a softening of Trump's harsh trade stance allowed a recovery in risky assets, with the benchmark S&P 500 (.SPX), and the tech-heavy Nasdaq (.IXIC), posting their biggest monthly percentage gain since November 2023.

The S&P 500 remains about 3% away from its record peak touched in February.

At 12:03 p.m. ET the Dow Jones Industrial Average (.DJI), rose 143.83 points, or 0.34%, to 42,449.44, the S&P 500 (.SPX), gained 29.76 points, or 0.51%, to 5,966.11 and the Nasdaq Composite (.IXIC), gained 155.31 points, or 0.82%, to 19,399.82.

Five of the 11 major S&P 500 sub-sectors fell with real estate stocks leading losses, down 0.8%.

On the flip side, information technology stocks (.SPLRCT), rose 1.2%, boosted by a 3.1% rise in Nvidia (NVDA.O), . Chipmaker Broadcom (AVGO.O), hit a fresh record high after the company said it has begun to ship its latest networking chip that aims to speed AI, last up 2.4%.

A U.S. Labor Department report showed job openings increased in April, but layoffs picked up, signaling a slowing labor market as tariffs impact the economic outlook.

Factory orders dropped sharply in April, as the boost from front-loading of purchases ahead of tariffs faded. Data from the Commerce Department's Census Bureau showed a 3.7% fall, after an unrevised 3.4% jump in March.

Monthly jobs data on Friday will offer more signs on how trade uncertainty is affecting the world's biggest economy.

Central bank officials including Fed Board Governor Lisa Cook, Chicago Fed President Austan Goolsbee and Dallas President Lorie Logan are due to speak through the day.

Shares of Kenvue (KVUE.N), lost nearly 7%, leading declines on the benchmark S&P index. The company, which makes consumer health products, said at a Deutsche Bank conference that retailers in the U.S. and China are destocking products due to uncertainty over tariffs.

Dollar General (DG.N), jumped 13.3% as the discount retailer raised its annual sales forecast after surpassing quarterly sales expectations.

Constellation Energy (CEG.O), rose 0.7% after Meta Platforms (META.O), said it had struck a power agreement with the utility's nuclear plant.

Advancing issues outnumbered decliners by a 2.25-to-1 ratio on the NYSE, and by a 2.16-to-1 ratio on the Nasdaq.

The S&P 500 posted 26 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 73 new highs and 43 new lows.

source : reuters

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Damon

Economic

Scott Bessent, the US Treasury Secretary, used his appearance at the American Swiss Foundation Leadership Summit in Zurich on Tuesday to send a direct warning to China, saying the country must choose between global cooperation or deeper economic isolation.

Speaking via video, Scott said, “China has a choice to make: be a reliable partner to the global community or deal with the consequences.” He emphasized that Beijing needs to shift from its current economic model and become a consumption-led economy, not one propped up by state-controlled exports.

According to remarks shared from the summit, Scott also stressed that the US is trying to remain attractive for capital by pushing tax cuts, easing regulations, and rebalancing trade.

He said the Trump administration is focused on reviving precision manufacturing, describing it as a key part of the strategy to boost domestic economic power.

Scott also mentioned the US wants to work more closely with Switzerland, especially in AI and financial services, saying, “There’s real untapped potential between our two countries that we’re only beginning to explore.”

China hits back at US and accuses Trump of breaching deal

The same day Scott gave that speech, China’s Ministry of Commerce issued a sharp response to the US, accusing President Donald Trump of violating the terms of their recent trade agreement.

In a statement shared Monday, the Chinese government rejected claims from Trump that Beijing had gone back on the deal reached in Geneva last month.

“If the US insists on its own way and continues to damage China’s interests, China will continue to take resolute and forceful measures to safeguard its legitimate rights and interests,” the ministry said.

Beijing pointed to new restrictions from Washington, including AI chip export controls, limits on chip design software, and a wave of revoked student visas for Chinese nationals.

They said those decisions were made unilaterally and went against the consensus formed during a January 17 phone call between Trump and Xi Jinping. The ministry said these US actions undermined all previous discussions and showed a lack of commitment to fair negotiation.

Even as tension rises, officials on both sides are still preparing for a potential phone call between Trump and Xi. A senior White House official told CNBC on Monday that while no specific date had been confirmed, the two leaders are likely to speak “very soon.”

Trump had previously said he hoped to speak directly with Xi to “get things moving” again, but the growing backlash from China is casting doubt over whether that conversation will happen this week.

White House pushes ahead with new trade deals despite fallout

On the US side, Deputy Treasury Secretary Michael Faulkender gave an update Monday on where the administration stands with trade talks. Speaking on CNBC’s Squawk Box, Faulkender said, “We continue to make very good progress. We’re close to the finish line on a couple of countries.”

He explained that the White House is aiming to announce several deals before July 9, the deadline set internally to move from temporary pauses to formal agreements.

Faulkender added, “As long as our partners demonstrate goodwill and real progress, we’ll keep working with them. We’re committed to getting real terms in place, not just headlines.”

He also made it clear that Trump’s administration wants “resolution and clarity” both for the American public and financial markets. Without naming the countries directly, Faulkender said, “We’re working on a couple of imminent deals that should be finalized soon.”

Source: CryptoSlate

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Adam

Commodity

Oil prices surged yesterday ending the day with a 3.75% gain as OPEC+ surprised markets with a supply increase that came in below expectations. Add to this rising tensions between Russia and Ukraine over the weekend and the perfect cocktail for gains materialized.

Ukraine launched major drone attacks on several Russian airfields just before peace talks between the two countries this week. Meanwhile, some US senators are pushing for stricter sanctions on Russia, including a proposal for 500% tariffs on imports from nations that purchase Russian oil.

This could in part explain yesterday's rally.

OPEC+ Meeting, Russia-Saudi Arabia Tension

Saudi Arabia and Russia had a tough time agreeing on OPEC+ oil policies on Saturday. Saudi Arabia wanted to speed up oil production increases, while Russia preferred to hold off, according to sources familiar with the talks.

Tensions are growing between these two major OPEC+ members after years of smooth teamwork. The last big disagreement was in 2020, when both countries pumped as much oil as they wanted, causing prices to crash.

On Saturday, eight key OPEC+ members decided to increase oil production by 411,000 barrels per day starting in July, following similar increases in May and June. This is part of a plan to gradually reverse production cuts made over the past five years to stabilize the market.

Oil prices are trading at levels last seen in March 2021 when the post-covid recovery was underway. The price of Oil is posing challenges for Oil producers with US producers in particular feeling the heat. The Trump administration had eyed a massive oil drive during its campaign but recent rig counts show that with prices at current levels this does not seem plausible.

According to the latest Baker Hughes report, the number of active oil rigs in the US dropped by 4 to 461, marking the fifth week in a row of declines. Given that markets are concerned about a slowdown in global growth, a surge in US drilling activity in the next 12 months seems like a pipe dream at this point.

OECD Lowers Global Growth Forecast

The Organisation for Economic Cooperation and Development (OECD) has added to the fears of market participants by downgrading its global growth forecast for 2025 and 2026 from 3.3% to 2.9%.

However, judging by today's price action, market participants have for now shrugged this off as Oil prices have turned green for the day just as the US session begins.

What is Supporting Oil Prices?

Looking at all that we discussed above, one would think Oil prices should be under pressure. Sure, the OPEC+ production numbers may be a let down and partially supported prices, but with a worsening global outlook and PMI data from both China and the US one would assume Oil prices may be under pressure.

On Monday an Iranian Diplomat stated that Iran was poised to reject a US proposal to end the nuclear dispute which has kept severe sanctions in place on Iranian Oil exports and the country as a whole. This has raised the risk premium on Oil prices as markets had been pricing in a potential deal between the two countries which could have led to an increase in Iranian supply.

Another factor that could be aiding Oil prices of late could be the weaker US Dollar which has faced consistent selling pressure as concerns mount about the US deficit and slowdown in growth.

However, right now it is almost impossible to pinpoint one exact reason for the rally in Oil prices or whether it will continue.

Technical Analysis - Brent Crude

From a technical analysis standpoint, Brent remains in a range between the 66.90 resistance handle and support around the 62.80 handle.

Looking at price action, it remains rather mixed with the most recent lower low being followed up with a higher high, which means another change in structure has taken place.

Bulls appear to have the upper hand for now- with a daily candle close below the support handle at 62.80 needed for further downside to materialize.

On the downside support rests at 61.08 and the 60.00 psychological handle.

A move higher would require a close above the 66.90 handle before a move toward the 68.19 resistance handle may come into focus.

Brent Crude Oil Daily Chart, June 3, 2025

Client Sentiment Data

Looking at OANDA client sentiment data and market participants are long on WTI with 71% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are long means WTI prices could decline in the near-term.