Investment Conclusion
If the US Supreme Court backs the rulings of the two lower courts that the President’s use of the IEEPA to impose tariffs is mainly illegal, there will be a mess markets cannot ignore.
That is because:
• Much of the Administration’s economic and geopolitical strategy have tariffs at the core. If they must be withdrawn or reenacted in a different form, policy will be damaged and, like Humpty Dumpty, it will not be possible to put it all together again in its original form.
• The alternative powers to the IEEPA are more difficult to implement and are unsuitable for sweeping reciprocal tariffs or for the tariff component of vague handshake trade deals.
• Even delays & the recasting of international agreements will generate uncertainty and risk.
• There are spillover effects to geopolitics (it may not be possible to sign the same “deals” twice – I would hazard certainly not with the EU).
• The President’s ability to rule by executive order without Congress will be impaired in other domains. • The mess may affect voters’ perception of the competence of this Administration.