Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

In late May 2025, Donald Trump’s ambitious tariff agenda encountered a major legal challenge. A U.S. trade court ruled that the president had overstepped his authority by imposing sweeping levies on imports from dozens of countries using emergency economic powers.[1]

Then, within 24 hours, an appeals court temporarily paused that ruling, allowing the tariffs to remain in effect – for now.[1]

This article explores how legal uncertainty, fiscal strain, and market volatility are converging – and what it might mean for investors worldwide.

Article Outline

1. What are Trump’s 2025 Tariffs?
2. Legal Backlash.
3. Fiscal Fallout.
4. Market Response.
5. Strategic Takeaways for Investors.
6. Conclusion.

What are Trump’s 2025 Tariffs?

In April 2025, Donald Trump announced a sweeping tariff plan. It included a 10% baseline levy on most imports from nearly 60 countries, alongside higher tariffs targeting goods from China, Mexico, and Canada.[1]

Trump justified these moves under the International Emergency Economic Powers Act (IEEPA), a law passed in 1977 to manage financial threats during national emergencies. Though traditionally used for sanctions, Trump applied it to trade policy – citing trade deficits and border issues as emergencies.[1][2]

Explainer: What is the IEEPA?

The International Emergency Economic Powers Act (IEEPA), passed in 1977, allows the U.S. president to regulate financial transactions during a national emergency.

Typically used to issue sanctions, IEEPA had never been applied to general tariffs – until Trump’s 2025 order.

Courts are now reviewing whether this application is lawful.[2]

Legal Backlash: Courts Push Back

Two key things happened:

1. On May 28, the U.S. Court of International Trade ruled that Trump had misused IEEPA. The court emphasized that only Congress has the constitutional power to impose tariffs, striking down a wide range of duties – including a 30% tariff on Chinese imports and 10–25% on North American goods.[2]

2. The very next day, a federal appeals court issued a temporary stay, allowing the tariffs to remain while the case proceeds.[1] Legal analysts caution that if the courts ultimately side with Trump, the decision could significantly expand presidential powers over trade.

Fiscal Fallout: The Role Tariffs Were Meant to Play

Trump’s 2025 budget includes $3.8 trillion in spending over 10 years. To help cover this, the administration expected significant revenue from the new tariffs. Estimates vary:

·  Goldman Sachs projected $200 billion per year;

·  Numera Analytics estimated $350 billion.[3]

If the tariffs are struck down, the U.S. deficit could increase from 6% to 7% of GDP, according to Capital Economics.[3] For bond markets – already alert to growing national debt – that’s a big deal. Treasury yields have reflected caution, and equity markets remain volatile.

Market Response: Mixed Signals

Following the initial court ruling, U.S. stock markets saw modest gains. The S&P 500 and Nasdaq each rose 0.4%.[3] But futures fell the next morning after the stay was granted, reintroducing uncertainty.[4]

Treasury yields dipped briefly, as investors sought safety. Gold prices held steady, reinforcing their status as a defensive asset – something Musaffa highlighted in a recent article on inflation-protected strategies.

Analysts at Brown Brothers Harriman warned that the longer tariffs stay in limbo, the greater the risk of stagflation – slow growth coupled with persistent inflation.[4]

Strategic Takeaways for Investors

This convergence of legal uncertainty, fiscal stress, and global trade tension highlights why investors – especially those following halal guidelines – may want to explore broader diversification.

Musaffa has recently explored assets like gold and Shariah-compliant funds as potential hedges against volatility.

Geographic diversification may also offer stability. For instance, undervalued markets like South Korea – where recent governance reforms and rising retail investment have drawn comparisons to Japan’s 2023 rally, may be worth watching.[3]

Conclusion

Trump’s tariff policy has raised legal, fiscal, and market risks with global implications.

As the courts deliberate, global investors are thinking about their strategy.

References:

[1] FT – US appeals court gives temporary reprieve to Donald Trump’s tariffs, 30 May 2025
[2] Bloomberg – The Legal Fight Over Trump’s Tariffs, What’s Next for Trade War, 29 May 2025
[3] FT – Tariff revenues and the deficit, 30 May 2025
[4] Bloomberg – Stock Market Today: Dow, S&P Live Updates for May 30, 30 May 2025

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