The stock markets’ modest gains on Thursday are a sign that investors are confident that a federal court decision blocking some of President Trump’s tariffs from going into effect will be overturned, an economist said.
In late afternoon trading, the S&P 500 and NASDAQ increased slightly while the Dow Jones Industrial Average dipped.
“The markets are taking the ruling with a grain of salt,” said James Mohs, an economist with University of Haven, told The Washington Times.
Mr. Mohs noted that the markets were down heavily in the morning before the S&P and NASDAQ markets rebounded. He said markets react when there is uncertainty, and the fact that two of the three major indexes are up suggests that Wall Street doesn’t see the ruling as a game-changer.
“Markets have knee-jerk reactions and sooner or later cooler heads prevail,” he said. “I don’t think there is much to that ruling and I think that’s what the markets are reacting to.”
Mr. Mohs expressed confidence that the ruling will be overturned, saying Mr. Trump does have the authority under the 1977 International Economic Emergency Powers Act to impose sweeping reciprocal tariffs by declaring the U.S. trade deficit a national emergency.
However, he predicted that the Trump administration will likely sidestep defending the president’s IEEPA powers and, instead, argue that the president has other authorities to impose tariffs.
For example, he suggested the administration could argue that Mr. Trump has the power to impose tariffs under Section 232 of the Trade Expansion Act. The law grants presidents broad power to adjust imports — including through the use of tariffs — if excessive foreign imports are found to be a threat to U.S. national security.
