Trump Tariffs May Remain In Effect While Appeals Proceed, U.S. Appeals Court Decides

Economic

China–U.S. Trade War

Summary:

A federal appeals court allowed President Donald Trump's most sweeping tariffs to remain in effect on Tuesday while it reviews a lower court decision blocking them on grounds that Trump had exceeded his authority by imposing them.

The decision by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. means Trump may continue to enforce, for now, his "Liberation Day" tariffs on imports from most U.S. trading partners, as well as a separate set of tariffs levied on Canada, China and Mexico.

The appeals court has yet to rule on whether the tariffs are permissible under an emergency economic powers act that Trump cited to justify them, but it allowed the tariffs to remain in place while the appeals play out.

The tariffs, used by Trump as negotiating leverage with U.S. trading partners, and their on-again, off-again nature have shocked markets and whipsawed companies of all sizes as they seek to manage supply chains, production, staffing and prices.

The ruling has no impact on other tariffs levied under more traditional legal authority, such as tariffs on steel and aluminum imports.

A three-judge panel of the U.S. Court of International Trade ruled on May 28 that the U.S. Constitution gave Congress, not the president, the power to levy taxes and tariffs, and that the president had exceeded his authority by invoking the International Emergency Economic Powers Act, a law intended to address "unusual and extraordinary" threats during national emergencies.

The Trump administration quickly appealed the ruling, and the Federal Circuit in Washington put the lower court decision on hold the next day while it considered whether to impose a longer-term pause.

The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the duties and the other by 12 U.S. states.

Trump has claimed broad authority to set tariffs under IEEPA. The 1977 law has historically been used to impose sanctions on enemies of the U.S. or freeze their assets. Trump is the first U.S. president to use it to impose tariffs.

Trump has said that the tariffs imposed in February on Canada, China and Mexico were to fight illegal fentanyl trafficking at U.S. borders, denied by the three countries, and that the across-the-board tariffs on all U.S. trading partners imposed in April were a response to the U.S. trade deficit.

The states and small businesses had argued the tariffs were not a legal or appropriate way to address those matters, and the small businesses argued that the decades-long U.S. practice of buying more goods than it exports does not qualify as an emergency that would trigger IEEPA.

At least five other court cases have challenged the tariffs justified under the emergency economic powers act, including other small businesses and the state of California. One of those cases, in federal court in Washington, D.C., also resulted in an initial ruling against the tariffs, and no court has yet backed the unlimited emergency tariff authority Trump has claimed.

Source: Reuters

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Political

President Donald Trump used a speech honoring soldiers on Tuesday to defend his decision to deploy troops to Los Angeles in a confrontation over his immigration policy, a move critics have decried as a politically motivated over-reaction.

"Generations of Army heroes did not shed their blood on distant shores only to watch our country be destroyed by invasion and third-world lawlessness," Trump told soldiers at the Army base in Fort Bragg, North Carolina.

"What you're witnessing in California is a full-blown assault on peace, on public order and on national sovereignty, carried out by rioters bearing foreign flags," Trump said, adding his administration would "liberate Los Angeles."

Trump's visit to Fort Bragg, home to some 50,000 active-duty soldiers, followed his move to deploy 700 Marines and 4,000 National Guard troops to Los Angeles in an escalating response to street protests over his immigration policies.

The Republican president said the military deployment was needed to protect federal property and personnel. California's Democratic-led government has sued to block Trump's move, calling it an abuse of power and an unnecessary provocation.

Street demonstrations have been underway since Friday, when activists clashed with sheriff's deputies. Los Angeles officials have said the unrest has been limited to a few downtown blocks and that the majority of demonstrators are protesting peacefully in support of immigrants.

In North Carolina, Trump and Defense Secretary Pete Hegseth took part in long-scheduled commemorations of the U.S. Army's 250th anniversary, watching soldiers demonstrate a special forces assault and use a long-range missile launcher.

It was the first in a series of celebrations of the Army anniversary involving Trump, ahead of a major parade in Washington on Saturday.

Speaking to reporters earlier on Tuesday in the Oval Office, Trump warned against demonstrators at that parade, saying "they're going to be met with very big force." He made no distinction between peaceful and violent protesters. The FBI and the Metropolitan Police Department have said there are no credible threats to the event.

POMP AND POLITICS

The week's Army commemorations combine Trump's penchant for patriotic pomp and his political positioning as a law-and-order president. Saturday's celebrations in Washington include thousands of troops, dozens of military aircraft and coincide with Trump's 79th birthday.

The Army was established on June 14, 1775, more than a year before the Declaration of Independence.

During his speech at Fort Bragg, Trump led a crowd filled with traditionally non-partisan service members through punchlines he repeats at political rallies. He drew jeers directed at the press corps and cheers for attacks on efforts to embrace transgender service members.

He also announced that the military would rename a number of bases which were changed after racial justice protests in 2023, including reverting to Fort Lee, which was originally named after Civil War-era Confederate commander Robert E. Lee.

Earlier this year, Trump restored the name Fort Bragg to the base, one of the largest in the world, despite a federal law that prohibits honoring generals who fought for the South during the Civil War. His administration says the name now honors a different Bragg - Private First Class Roland Bragg, who served during World War Two. In 2023, the base had been renamed Fort Liberty.

Since launching his second term in office in January, Trump has made the military a focus of his efforts. The president's cost-cutting government reforms have largely spared the Defense Department's nearly $1 trillion annual budget. He has pledged to avoid international conflict while launching new weapons programs and increasing the use of the military domestically, including in immigration enforcement.

Trump has pledged to deport record numbers of people who are in the country illegally and to lock down the U.S.-Mexico border, setting the ICE border enforcement agency a daily goal of arresting at least 3,000 migrants.

Demonstrators in Los Angeles have assembled, among other places, at a government facility where immigrants are detained.

Though military forces have been deployed domestically for major disasters such as Hurricane Katrina and the attacks of September 11, 2001, it is rare for troops to be used domestically during civil disturbances.

Even without declaring an insurrection, however, Trump can deploy Marines under certain conditions of law or under his authority as commander in chief.

The last time the military was used for direct police action under the Insurrection Act was in 1992, when the California governor at the time asked President George H.W. Bush to help respond to Los Angeles riots over the acquittal of police officers who beat Black motorist Rodney King.

Source: Reuters

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Cryptocurrency

On-chain data shows that Bitcoin’s (BTC) brief slide to $100,000 strengthened rather than weakened market structure, Glassnode said in a June 10 report.

Bitcoin is currently trading at $109,500, after an over 4% climb on June 9 to hit a weekly high of $110,600.

The report noted that the 9% drawdown following the June 7 record high of $111,965 resulted in only $200 million in realized losses, which is significantly lower than the prior corrections this cycle.

Most of the exits came from holders with BTC younger than one week, indicating capitulation by recent entrants rather than broad selling across seasoned wallets. Loss-taking by addresses that held Bitcoin for more than three months stood at zero during the move.

Meanwhile, open interest dropped by $2.3 billion, the seventh-largest deleveraging event since 2023. This movement suggested the decline was driven mainly by derivatives liquidation rather than spot distribution.

The price bounced before testing the short-term holder cost basis at $97,600 and stayed above the psychological $100,000 price level.

The report highlighted that holding that band keeps cyclical momentum intact because 41% of trading days since the 2022 bottom have experienced deeper pullbacks.

Long-term holders realized $930 million in profit per day at the recent peak, matching the pace recorded during March’s breakout above $100,000 but still well below the $1.64 billion peak seen in early April.

Long-term holders retain supply

Even with higher spending, the cohort’s aggregate balance continued to climb, an uncommon pattern in late-cycle conditions. The report attributed the stickier supply to exchange-traded fund (ETF) custody programs and other institutional channels that remove coins from liquid circulation.

The realized profit-loss ratio for long-term holders reached 9.4, a threshold exceeded on fewer than 16% of trading days since 2011 and typically associated with euphoria. Meanwhile, the UTXO Realized Price Distribution shows a dense band of coins acquired around $100,000 to $103,000.

Price now sits at the upper edge of that cluster, with relatively light historical volume above it, creating an “air gap” region that may allow rapid moves if demand persists.

Realized Supply Density, which measures the share of supply with a cost basis near the spot price, has increased alongside the recent rally, indicating heightened sensitivity.

Options traders appear unconcerned, as at-the-money implied volatility across both short and long tenors continues to fall, a posture that has preceded volatility spikes in past cycles. The report noted the contrast as a potential setup for larger moves if the price retests the all-time high.

For now, the muted reaction to last week’s decline and the swift recovery above $100,000 leave the uptrend intact and signal that demand absorbed the largest futures-driven shake-out in two months.

Source: Cryptoslate

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Olivia Brooks

Economic

Commodity

China–U.S. Trade War

The US and Mexico are closing in on a deal that would remove President Donald Trump’s 50% tariffs on steel imports up to a certain volume, according to people familiar with the matter, a revamp of a similar deal between the trade partners during his first term.

Trump hasn’t been directly involved in the negotiations and would need to sign off on any deal. The talks are being led by Commerce Secretary Howard Lutnick, according to the people, who asked not to be identified as the discussions are private.

The people said the agreement hasn’t been finalized. Under its current terms, it would allow US buyers to import Mexican steel duty-free as long as they kept total shipments below a level based on historical trade volumes, according to the people. The new cap would be higher than what was allowed under a similar deal during Trump’s first term, they said, which was never a fixed figure but designed to “prevent surges.”

The White House didn’t immediately respond to a request for comment. Mexican President Claudia Sheinbaum’s office also didn’t respond to a request for comment.

At an event on Tuesday, Mexican Economy Minister Marcelo Ebrard said he told US officials in meetings last week that steel tariffs are not justified in Mexico’s case because the US sends more steel to Mexico than vice versa. Last Friday, he posted a picture that showed him shaking hands with a smiling Lutnick in Washington.

“We are waiting for their response, because on Friday we gave them the details of Mexico’s argument and we are right,” Ebrard told reporters Tuesday. “So we are going to wait for their response which will probably be this very week.”

Trump last week announced he would double steel duties to 50% after saying he would approve the purchase of United States Steel Corp. by Japan’s Nippon Steel Corp., a move he said would protect the domestic industry and national security. While domestic steelmakers welcome the move, end-users have urged the administration to ease the tariffs.

The negotiations come as Sheinbaum seeks an accommodation with Trump over immigration and drug trafficking across their shared border, which the US leader has demanded Mexico halt. Homeland Security Secretary Kristi Noem accused Sheinbaum Tuesday of “encouraging” more anti-deportation protests in Los Angeles, where the US has deployed troops. Sheinbaum has called Noem’s claim “absolutely false.”

The talks also come ahead of a Group of Seven leaders summit in Canada, where the two presidents are likely to meet.

US steel imports from Mexico totaled about 3.2 million metric tons last year, accounting for 12% of total shipments of the material according to Commerce Department data. A previous deal the US reached with Mexico in 2019, during Trump’s first term, agreed to prevent import volumes that exceeded average levels for the 2015-2017 period.

Source: Bloomberg Europe

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Manuel

Economic

Political

The White House didn’t immediately respond to a request for comment. Mexican President Claudia Sheinbaum’s office also didn’t respond to a request for comment.

US steel stocks moved lower in late trading after Bloomberg’s report. Cleveland-Cliffs Inc. dropped more than 7%, and Nucor Corp. fell more than 4%. The Mexican peso trimmed losses.

The talks also come ahead of a Group of Seven leaders summit in Canada, where the two presidents are likely to meet.

Source: Bloomberg

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Manuel

Economic

China–U.S. Trade War

Trade talks between the U.S. and China in London are going well and could spill into a third day, U.S. negotiators said, as the two superpowers pushed for a breakthrough on duelling export controls that had threatened to unravel a delicate tariff truce.

U.S. Treasury Secretary Scott Bessent told reporters he would return to Washington for a prior commitment but U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer would continue the talks as needed.

Lutnick told reporters earlier Tuesday that the talks could run into Wednesday.

"I think the talks are going really, really well. We're very much spending time and effort and energy - everybody's got their head down working closely," he told reporters at Lancaster House, where the two teams have met for two days.

"I hope they end this evening, but if they need be, we'll be here tomorrow," he said as the U.S. delegation arrived for evening talks with Chinese officials.

Bessent said the talks had been productive and were ongoing.

Negotiators had paused for a break earlier before reconvening at about 8 p.m. local time (1900 GMT). No details were immediately available from the meetings, which stretched for more than five hours following a full day on Monday.

A White House official also said the U.S.-China trade talks were going "fine," but declined to provide details.

Having agreed to step back from a full-blown trade embargo at a first round of talks in Geneva in May, the two sides are now seeking agreement after they accused each other of trying to throttle supply chains with a raft of export controls.

White House economic adviser Kevin Hassett said on Monday that the U.S. could lift recently imposed export controls on goods such as semiconductors if China sped up the delivery of rare earths and magnets that are crucial to its economy.

The blow-up over rare earths, which has sparked alarm in boardrooms and factory floors around the world, came after last month's preliminary deal in Geneva to cut tariffs, which eased investor fears that a trade war would lead to a global slowdown.

William Reinsch, a trade expert with the Center for Strategic and International Studies, said the meeting's length may indicate difficulty in the negotiations.

"My read is Trump is very anxious his team comes back with something he can brag about, and it looks like the Chinese are holding out, said Reinsch, a former U.S. official. "That said, I expect there to be some kind of agreement eventually, and you can be sure he’ll call it a big success, regardless of what’s in it."

Josh Lipsky, chair of international economics at the Atlantic Council, said the extended nature of the talks this week could point to more detailed discussions. "My sense of that is that they're getting granular at this point, which should be seen as a positive," he said, although he cautioned against expecting a major breakthrough this week.

TARIFF TURMOIL

U.S. President Donald Trump's shifting tariff policies have roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs. The World Bank on Tuesday slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies.

But markets have made up much of the losses they endured after Trump unveiled his sweeping "Liberation Day" tariffs in April, aided by the reset in Geneva between the world's two biggest economies.

The second round of U.S.-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies.

Customs data published on Monday showed that China's exports to the U.S. plunged 34.5% in May, the sharpest drop since the outbreak of the COVID pandemic.

While the impact on U.S. inflation and its jobs market has so far been muted, tariffs have hammered U.S. business and household confidence and the dollar remains under pressure.

DISCUSSING DISAGREEMENTS

The talks have been led by Bessent, Lutnick and Greer, with the Chinese contingent helmed by Vice Premier He Lifeng.

The two sides met for almost seven hours on Monday and resumed just before 1000 GMT on Tuesday, with both expected to issue updates later in the day.

The inclusion of Lutnick, whose agency oversees export controls for the U.S., indicates just how central rare earths have become. He did not attend the Geneva talks, when the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.

China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains.

In May, the U.S. responded by halting shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued.

Hassett said he expected any export controls from the U.S. to be eased and rare earths released in volume once the two sides had shaken hands in London.

But he said any easing would not include the "very, very high-end Nvidia stuff," referring to Nvidia's (NVDA.O), most advanced artificial-intelligence chips that have been blocked from going to China over concerns about potential military applications.

"I'm talking about possible export controls on other semiconductors which are also very important to them," he said.

Source: Reuters

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Economic

May's Consumer Price Index (CPI) is expected to show prices increased at a slightly faster clip than in April. The report, due Wednesday at 8:30 a.m. ET, comes as investors closely watch for any signs that President Trump's tariffs are impacting what consumers pay.

According to Bloomberg data, headline inflation is expected to have accelerated slightly to 2.4% in May from 2.3% in April, which marked the lowest yearly increase since February 2021. Month-over-month prices are estimated to rise 0.2%, matching April's increase.

On a "core" basis, which excludes volatile food and energy costs, CPI is expected to have risen 2.9% over the past year in May, a slight acceleration from April's 2.8%. Monthly core price increases are anticipated to rise 0.3%, ahead of April's 0.2%.

The report reflects the time period about a month after Trump's "Liberation Day" tariff announcements shook markets and businesses. Since then, many reciprocal tariffs have been paused, but the 10% baseline duties for most countries remain in place.

Mexico and Canada continue to face fentanyl-related tariffs, and industry-specific tariffs on steel, aluminum, and autos remain unchanged. Tariffs on China remain significant, with the effective tariff rate on Chinese goods hovering around 30%.

"May's CPI report will be an important test of the speed and magnitude to which higher tariff rates are being passed along to the consumer," said the Wells Fargo economics team, led by Sarah House, in a preview note.

House expects a modest rise in overall and core inflation from higher goods prices but doesn't foresee a big jump in this report. Still, economists there say the risk of higher prices later this year remains, a view shared by many on Wall Street.

"Going forward, the impact of tariffs will likely provide a somewhat larger boost to monthly inflation, and we expect monthly core CPI inflation of around 0.35% over the next few months," Jan Hatzius of Goldman Sachs wrote, noting a "sharp acceleration" in most core goods categories but limited impact on core services inflation, at least in the near term.

Meanwhile, BNP Paribas said that although May's core inflation reading could register its strongest monthly gain since Q2 2023, hotter prints are expected in June and July.

According to BNP, price increases from tariffs typically appear two to three months after implementation. However, broader uncertainty about the timing and impact of tariff-related price changes has weighed on the outlook.

"The Trump administration’s 'yo yo' approach to implementing tariffs and attendant uncertainties about their timing, form, and longevity may encourage firms to adopt a policy of strategic patience around increasing prices," Andy Schneider, senior US economist at BNP Paribas, wrote in a note to clients last week.

"This could potentially delay tariff-induced inflation, in addition to leading to an ultimately messier and more persistent response."

Echoing this uncertainty, Atlanta Fed president Raphael Bostic recently said constant tariff changes are "making it much harder to declare with any conviction that price increases from tariffs will be a one-time event."

Markets still expect the Fed to hold interest rates steady at its policy meeting next week.