Markets Jolt as Trump Promises ‘More Powerful’ Tariffs

Markets Jolt as Trump Promises ‘More Powerful’ Tariffs- Global markets wobbled at the start of the week after Donald Trump pledged to deploy “much more powerful and obnoxious” tariffs following a legal setback at the Supreme Court of the United States.

The US president insisted he now has “far more powers and strength” to reshape America’s trade policy, even after justices ruled that he acted unlawfully when imposing sweeping “reciprocal” tariffs — dubbed “liberation day” levies — on a broad range of countries last year. While the court limited the specific emergency authority Trump had used, it left open alternative trade mechanisms that could allow new duties to be imposed under different statutes.

Within hours of the ruling, Trump announced fresh 15pc tariffs on imports, though the measures can only remain in place for 150 days without congressional approval. The rapid escalation has reignited fears of a renewed global trade war at a moment when inflation remains stubborn and central banks are navigating a fragile economic landing.

Dollar Drops, Safe Havens Rise

The immediate market reaction was cautious but clear. The dollar fell as much as 0.5pc against a basket of major currencies as investors reassessed US growth and inflation risks. At the same time, demand for traditional safe-haven assets such as gold strengthened.

On Wall Street, the moves were modest but telling. The Nasdaq Composite slipped 0.1pc to 22,873.20, while the S&P 500 and Dow Jones Industrial Average were little changed. Traders said the relatively muted equity response masked deeper unease about policy unpredictability rather than outright economic deterioration.

Cryptocurrencies also retreated, reflecting broader risk aversion across global markets.

Inflation Fears Resurface

The tariff turmoil comes at a sensitive moment for monetary policy. Traders have scaled back expectations of imminent interest rate cuts by the Federal Reserve amid concerns that new import taxes could push up consumer prices.

Money markets now suggest that any rate cut could be delayed until September, compared with expectations for a possible July move before the court’s decision. Friday’s higher-than-expected core personal consumption expenditures (PCE) data — the Fed’s preferred inflation gauge — has already complicated the outlook.

Analysts warn that additional tariffs would likely increase costs for businesses and consumers alike. Although companies initially absorbed much of the burden from earlier levies, sustained trade barriers could eventually feed through to higher retail prices, particularly for consumer goods and intermediate inputs.

Carsten Brzeski of ING said the bank remained “nervous about further potential consumer goods price increases,” noting that corporate America has thus far borne much of the tariff shock.

Legal Limits, Political Leverage

The Supreme Court’s decision did not eliminate presidential tariff authority altogether. Instead, it clarified that the legal route Trump used for last year’s global levies exceeded statutory limits. Other trade laws — including those tied to national security or unfair trade practices — may still offer avenues for imposing duties, albeit with procedural constraints and time limits.

Trump has framed the ruling as a technical recalibration rather than a defeat, arguing that alternative statutes provide stronger footing and “legal certainty.” Critics, however, contend that the 150-day cap on new measures increases pressure on Congress and injects further political volatility into trade policy.

The White House has signalled it will “stand by” bilateral tariff agreements already negotiated, even as it threatens higher duties on countries that “play games.”

Europe and UK on Edge

Across the Atlantic, policymakers are reassessing their approach. The European Commission is reportedly considering delaying ratification of a US trade agreement in light of the renewed uncertainty.

In London, a spokesman for Prime Minister Keir Starmer said “nothing is off the table,” suggesting Britain could explore countermeasures if US levies expand.

The renewed brinkmanship risks complicating transatlantic relations just as Western governments seek greater coordination on supply chains and industrial policy.

A Volatile Path Ahead

For investors, the latest twist underscores the fragility of the current market environment. Equities remain near record levels, inflation is easing only gradually, and central banks are attempting to calibrate rate policy without tipping economies into recession.

A new cycle of tit-for-tat tariffs could disrupt supply chains, dampen business investment and complicate the Fed’s inflation fight. Even if the immediate economic impact proves limited, the policy uncertainty alone may weigh on confidence.

For now, markets appear to be waiting for clarity — from Congress, from the courts and from the White House itself. But Trump’s promise of “more powerful” tariffs suggests that trade tensions are far from resolved, and that volatility may remain a defining feature of the months ahead.

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