Judge judges: Trump’s import duties are illegal – what is the impact?

An American court ruling causes a stir in Washington. The Court of Appeal has ruled that the trade rates that President Donald Trump introduced this year are contrary to the law. Nevertheless, the taxes remain in force for the time being. The crucial question for investors now is: what does this mean for the financial markets, and for crypto?

Hof sets Streep through Trumps rates

The Court of Appeal in Washington has ruled with a majority against 4 that Trump went beyond his book. The import duties that he introduced on almost all countries in the world, a basic rate of 10 percent and so -called ‘reciprocal rates’ that rose to 50 percent and even for a moment to 145 percent, are illegal according to the judges.

Trump relied on the International Emergency Economic Powers Act (IEPA), a 1977 law that allows presidents to take emergency measures in “unusual and extraordinary threats”. But according to the judges, import tariffs do not fall under those powers: rates are an explicit right of the congress, not from the president.

The ruling follows earlier judgments of lower courts and confirms that Trumps approach is legally on loose screws. However, an important detail is that the ruling will only start on October 14. Until that time, the rates will continue to apply, and Trump has already announced that it would appeal to the Supreme Court.

It can therefore take a long time before there is actually clarity about the fate of the rates, and therefore about the impact on the global economy and financial markets.

Response from Trump

As expected, Trump responded fiercely. On his own social media platform Truth Social, he called the judges “very partial” and warned that the abolition of the rates “would literally destroy the US”.

Trump emphasizes that, according to him, the rates are essential to combat unfair commercial practices and to protect American jobs.

For companies and consumers, however, the reality is different: the taxes have led to higher prices, international countermeasures and great uncertainty for traders.

Impact on financial markets and crypto

Since their introduction, the rates have already raised more than 150 billion dollars in extra tax revenues, but especially paid by American companies and consumers. If the ruling ultimately becomes final, it may mean that the US government must repay hundreds of billions of dollars.

In addition, Trumps trade policy is under pressure. Rates were his most important negotiating weapon towards countries such as China, Canada and Mexico. A legal line through the account limits the leeway of the president considerably.

For the financial markets, this judgment can just mean a positive turning point. FED chairman Jerome Powell previously emphasized that the absence of interest rate cuts was partly due to the higher import duties, which fueled inflation. Removing those rates can illuminate the inflation pressure and thereby increase the space for the Federal Reserve to lower the interest.

For investors in speculative assets, including crypto, that is crucial. Lower interest rates make capital cheaper and stimulate risk appetite. Historically, this often leads to upward movements in risky markets, including Bitcoin (BTC) and Ethereum (ETH).