dailynewsnblog
By Laura Matthews and Sinéad Carew
NEW YORK/LONDON, Feb 23 (Reuters) – Far from being a source of relief, the Supreme Court’s takedown of President Donald Trump’s tariffs has infused new risks and uncertainties into trade policy, U.S. debt and the dollar.
The Court made no decision on refunds, leaving open the possibility of a hole of around $170 billion in U.S. finances. Trump’s furious rush to impose replacement levies has already raised hackles in Europe and fresh confusion about trade policy.
The dollar slid through Monday in Asia, most notably against havens such as the Swiss franc and yen, while Treasuries have been stumped as markets struggled to come to grips with risks to the fiscal position and untangle the implications for inflation.
The clearest takeaway seems to be that Trump’s replacement tariffs are lower and should ease short-term price pressures. But the Court has also crimped his power and the consequences of that for markets and the economy are unpredictable.
“Uncertainty is back, and given the latest muscle-flexing by European leaders, the risk of escalation is now higher than it was a year ago,” ING analysts said in a note.
For Treasuries, one risk is litigation in pursuit of refunds – something likely to spend months in lower courts.
Estimates for the revenue raised so far by tariffs run above $175 billion, a modest piece of total projected revenues of more than $5 trillion, but enough to risk extra fundraising.
Dan Siluk, head of global short-duration and liquidity at Janus Henderson, said refunds will mean higher debt issuance.
“At the margin, that raises the risk of further steepening pressure at the long end of the curve, particularly if refund-related issuance coincides with already elevated borrowing needs and ongoing QT (quantitative tightening),” he said.
Yields on 10-year Treasuries moved a touch higher to 4.1% on Friday but have come down from peaks above 4.5% in mid-2025, alongside signs of cooling inflation and expectations for Fed rate cuts. The curve has steepened, led by a drop in short-term yields.
On Monday, the cash market was closed in Asia owing to a holiday in Tokyo but the futures-implied yield was a fraction lower at 4.05%.
“Markets are currently focused on the short-term impact – namely, lower inflation and interest rates falling more quickly,” said Alberto Conca, chief investment officer at LFG+ZEST in Lugano, Switzerland.
“I think that’s rather short-sighted, though, because it increases an already enormous deficit, and yield curves ought to steepen more significantly given that the U.S. government’s finances are, effectively, out of control.”
