Right now, the word "uncertainty" is everywhere. But… what does that actually mean in practice? How does the FED view it? And more importantly, what should we do with our investments?
THE MINUTES
So, according to the minutes of the FOMC meeting on May 6–7, the FED noted that there is “unusually high uncertainty” regarding the path of the economy. And that’s not something they say often. It’s a clear indication that even policymakers themselves are struggling to accurately predict the next steps.
What does that mean?
It means that there is no clear answer—not about where inflation is headed, nor about what will happen with employment, nor about how all of this will affect our investments. And the main reason? TARIFFS.
Yes, you heard that right. The tariffs that have already been imposed, as well as those that might follow, have created significant noise in the economy. The word “tariffs” appears 17 times in these minutes alone. When something is repeated that often, it’s no coincidence.
The FED recognizes that
(a) inflation may rise, because many businesses plan to pass the increased costs on to consumers,
(b) some companies may see an opportunity and raise their prices… just because, and
(c) there is concern that expectations of future inflation will rise. If that happens, price increases could become entrenched.
Of course, not everything is doom and gloom! There are also positives. The FED itself pointed out that if negotiations lead to a reduction in tariffs, inflation could be curbed. Also, if the economy slows down, there won’t be much room for price increases, because demand will fall. And finally, if consumers don’t accept the higher prices, companies will be forced to hold back. So, market forces will act as a brake.
So yes, there is UNCERTAINTY. But not chaos. Not panic.
The FED itself admits that the situation is balanced. The labor market is “in balance,” as it says, even if fragile. And yes, there are risks, but everything will mainly depend on the course of trade policy and government decisions.
Not even the Courts know what is happening
The U.S. Court of International Trade fully struck down Trump’s tariff policy, ruling that the President overstepped his authority by relying on the IEEPA. The Court made it clear that the Constitution grants the exclusive power to impose taxes and tariffs to Congress—not to the President.
This ruling meant the immediate suspension of tariff collection.
THE REVERSAL
Just a few hours later, the Federal Court of Appeals decided to temporarily freeze the lower court’s ruling, thus giving the Trump administration some breathing room as it plans to appeal to the Supreme Court.
This means that for now, the tariffs are NOT repealed. Their implementation continues—at least until the Appeals Court decides whether to uphold or overturn the nullification ruling.
This is a temporary win for the Trump administration, giving it time to prepare its defense and attempt to fully restore the President’s authority to impose international tariffs.
THE BACKGROUND
Let’s recall what happened and how it all ties together. Trump had imposed 10% tariffs on all imports, with even higher rates for countries running a trade surplus with the U.S. He did so under the 1977 IEEPA law, claiming that trade deficits were… a national threat.
The Court rejected this reasoning, stating that the IEEPA does not grant the President such powers—especially not to create such an extensive, global tariff system.
So, what happens now? For the moment, the case is… up in the air. We have:
-
An initial court ruling that nullifies all tariffs,
-
A temporary freeze of that ruling by the appellate court,
-
And an upcoming appeal to the Supreme Court.
Meanwhile, the Trump administration has 10 days to present new evidence or revise its policies. One thing’s for sure—this case will be on our radar for quite a while.
Posted Using INLEO
