It was a manic, holiday-shortened week that ended with a bombshell: the Supreme Court ruled 6-3 that Trump’s use of a 1977 emergency law to impose reciprocal tariffs was unlawful.
But if you thought that was the end of the trade wars, think again. Within hours, Trump announced a new 10% blanket tariff on all countries via Truth Social, immediately pivoting to the Trade Act of 1974. A day later, he hiked it to 15%.
So what happens to the previous country-specific deals? They now appear dead in the water. The big headache, however, is the $160 billion refund logjam. Companies that paid up under the now-illegal ruling are due massive reimbursements, but with no clear process outlined, litigation is guaranteed.
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Markets initially rallied on the news, but yields ticked up on deficit fears—those tariffs were funding government spending, and that hole just got bigger.
Meanwhile, the data paints a sticky picture
GDP slowed sharply to 1.4% in Q4, well below forecasts, while December PCE inflation unexpectedly heated up to 2.9%. Throw in hawkish Fed minutes (rate hikes are still on the table), and the central bank is trapped between slowing growth and sticky prices.
What to watch this week
- Nvidia Earnings (Wed): With a 13% weighting in the Nasdaq, this is market-moving stuff. A miss could sink stocks; a beat fuels the AI fire.
- Consumer Confidence (Tues): Jobs perceptions are slipping—if that worsens, the dollar could soften.
- PPI Data (Fri): Forecasts point to easing pipeline pressures, which might give the Fed—and markets—some breathing room.
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