“Nothingburger” or legal landmine? Will markets be stuck in courtroom purgatory

In a courtroom twist fit for a political thriller, the U.S. Court of International Trade has just yanked the brakes on Trump’s so-called Liberation Day Tariffs, ruling that his tariff bazooka overshot its legal range under the IEEPA. The White House has already hit the appeal button, and this legal slugfest now looks bound for the Supreme Court stage.

Markets, never one to wait for the final act, went full risk-on as the tsriff curtain lifted. The dollar popped like a champagne cork, surging on relief and recalibration. Risk assets found a pulse again, while gold and yen—safe havens that had been overbought protection against tariff turmoil—took a hit as fear melted away. Asia FX followed the broader DXY tide, with regional currencies dragged down by the dollar’s undertow. However, Japan’s yen fared worse, still tripping over its JGB bond market scare.

The front end of the U.S. rates curve got punched in the face, as traders priced out some of the Fed cuts that had been pencilled in for a tariff-fueled slowdown. A minor curve flattening followed as short-term yields sold off—classic repositioning when panic trades unwind and some semblance of macro normalization creeps back into the equation.

So, where do we go from here? Don’t kid yourself—the tariff wall isn’t coming down tomorrow. Appeals are already in motion, and this road leads straight up the marble steps of the Supreme Court, which means the levies will likely keep humming in the background like a generator during a blackout. Markets now have to price a season of legal fog: nobody can say how long it takes to burn off, only that visibility stays poor.

And Washington still has other knives in the drawer. Trump could dust off Section 232 or Section 301—the tried-and-tested “national security” and “unfair practice” franchises. Each demands a formal USTR investigation, but the case law is clearer, and the courts have tended to give the executive branch plenty of rope.

Suppose Trump really wants to show off the exotic hardware. According to Goldman Sachs, “there’s always Section 338 of the 1930 Trade Act”—an antique blunderbuss that has never left the cabinet but, in theory, allows the U.S. to slap 50 percent duties on any country deemed to “discriminate” against American goods. Proving discrimination, though, could turn into a legal quagmire worthy of Kafka’s court.

Bottom line: we’re staring at an extended period of tariff uncertainty, where every headline, judge’s ruling, USTR press leak, or presidential social media tirade can shift the price dial. Position accordingly—trade the volatility, but keep some dry powder. This saga is far from its final chapter, and the plot twists will keep liquidity hunters and hedgers alike on a hair trigger.

Fortunately, I wasn’t holding any meaningful short dollar risk when the headlines dropped. But my “Tradar” nudged me at 145.75 to seel USD/JPY—not because of some grand technical setup, but simply off the back of the Goldman “Nothingburger” tag on the court ruling. I’m no tariff lawyer, but GS’s Alec Phillips’ explanation sounded like good legal advice ( see below).

Courtroom dramas aren’t really my preferred macro backdrop, so I’ve mentally filed today in the 24-hour noise drawer. Small size, scalper’s hat on. I’m fading the knee-jerk dollar strength in G-10 and the Asia FX wobbles that may not stick. Sure, the tariffs will likely stay in place during the appeals process—but that just locks us into a holding pattern of courtroom purgatory,

These are still early innings. Until we get a read on how far and fast the appeal moves—or whether Trump finds another legal avenue to rearm—keep it light and trade around the edges.

I clipped this from ING Analysts, and it’s worth reading.

The FOMC minutes are worth a read as they provide the Fed's take on market developments in April. They attribute the Treasury sell-off more to the swap spread (US 10-year Treasuries versus swaps) than to the basis trade (cash versus futures). The Fed also noted, based on feedback from its market contacts, that the sharp decline in the dollar was primarily driven by increased FX hedge ratios, rather than significant foreign selling of US assets. While acknowledging that global investors only change strategies slowly and not ruling out future changes, the suggestion that the dollar selling was mainly driven by hedging is slightly less serious for the dollar. The price for European investors to hedge US assets using the three-month forward is still relatively expensive at 2.4% per annum and suggests that foreign investors into the US will need a drip-feed of negative US news to keep dollar hedge ratios high/higher, even though it's becoming commercially more expensive. Last night's news on tariffs marginally narrows that risk premium and is helping the dollar.

Tariffs on ice, not dead: Goldman slaps a ‘nothingburger’ sticker on trade court drama

Futures surged. The dollar spiked. And risk bulls declared Trump’s tariff war officially dead after a panel of obscure trade court judges—led by a Reagan-era holdover and Biden appointees—blocked the White House’s sweeping use of the International Emergency Economic Powers Act (IEEPA). Headlines screamed “Tariffs Blocked!” and the S&P 500 nearly rang the bell on 6,000.

But Goldman Sachs rolled up with a reality check: not so fast.

In a surgical note dropped late Wednesday, Goldman’s political risk chief, Alec Phillips, dubbed the ruling a legal “setback,” not a policy game-over. Their verdict? This is a nothingburger with a side of delay. The ruling torpedoes 6.7 percentage points of tariff hikes this year—including the 10% across-the-board slug and fresh duties on China, Canada, and Mexico—but Trump’s war chest is far from empty.

Goldman lays out the path like a seasoned macro tactician: Trump can just reroute. Section 122 allows an instant tariff reboot—15% max—for 150 days with no investigation. He could flip that switch tomorrow. If he wants longevity, Section 301 is sitting pretty, ready to launch targeted tariffs after a few months of “due process.” For good measure, there’s Section 232 for sector-specific firepower (think semis and pharma), and even the long-dormant Section 338, which allows up to 50% tariffs on countries that “discriminate” against the U.S.—an easy narrative win for the Trump camp.

Goldman’s punchline? Expect the White House to roll out a fresh 122-based tariff plan within days—keeping the pressure on U.S. trading partners while buying time to launch broader Section 301 actions. The court ruling may slow the process, but it won’t change the outcome. Tariffs are still coming. They’re just arriving through a different legal door.

In short, traders betting on a tariff ceasefire might want to check their charts—and their assumptions. The Trade Court may have fired a warning shot, but Trump still holds the arsenal.