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11.21.2025

WHO SHOT THE TARIFF?

Supreme Court has to decide about tariff



The final decision on whether the use of IEEPA to impose tariffs is legal will be decided by the Supreme Court, which started to hear arguments in the first week of November. The final ruling is expected by the end of 2025, but no fixed date has been set.
Judging from the preliminary hearing, the Supreme Court appears sceptical about the use of the IEEPA as an appropriate tool to impose tariffs. However, oral arguments are not always indicative of the Court’s decision. When the Supreme Court takes a case, it usually reverses a lower court's decision.
In this note, we tentatively explore the impact that a ruling against the IEEPA tariffs could have on the outlook for US rates. While our tactical positioning is unchanged, as we do not expect to hear from the Supreme Court before year-end, our NEUTRAL strategic outlook is under review.
Depending on a combination of policy and macro assumptions related to the possibility that the Court will rule against the Trump administration, 10y UST yields may reach 5.0-5.50% area next year.
A word of caution: The impact on the budget could be even more severe if President Trump proceeds with the plan to issue tariff rebate cheques of USD 2,000 to low-and medium-income voters. While future research will examine this issue as more clarity emerges, we believe the risk is real at this stage.
President Trump’s popularity is weakening. Ahead of the mid-term elections, we cannot rule out that the President might adopt expansionary fiscal measures, such as tariff rebate checks, to regain popularity.

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CHIARA CREMONESI 
Senior Rates Strategist


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