Markets Spooked By a Looming U.S. Supreme Court Ruling on the Legality of 2025 Tariff Hikes – Currency Thoughts
Markets Spooked By a Looming U.S. Supreme Court Ruling on the Legality of 2025 Tariff Hikes
January 14, 2026
The Supreme Court will be revealing its decisions on several cases at 10:00 EST today, and it’s possible that the decision on Trump’s large and widespread tariff hikes may be included in this batch. Those tariffs hold a foundational role in the whole economic and foreign policies of the second Trump presidency. A ruling striking down many of the tariffs, among other things, would have profoundly adverse implications for the future sustainability of the present U.S. fiscal course. A second eagerly awaited U.S. event, producer price figures for October and November, occurs even sooner at 08:30 EST, and the third quarter current account deficit is also on today’s menu of U.S. data releases.
The dollar has lost some marginal ground overnight, and U.S. stock futures are trading in the red. Among other stock markets this Wednesday, share prices rose by 1.5% in Japan, 0.9% in Indonesia, 0.7% in China, and 0.6% in Hong Kong. European equities thus far are mixed, with Germany’s Dax down 0.3%, the Paris CAC showing no net change, and the British FTSE holding onto a 0.4% gain.
Ten-year sovereign debt yields have slipped to basis points in the U.S. and U.K. and a basis point in Italy, France and Germany, but the Japanese JGB yield is a basis point higher. Silver’s moonshot (+6.0% overnight) continues, while the prices of gold (+1%) and oil (+0.5%) are higher, too.
China weathered Trump’s trade war is fine fashion. Its trade surpluses of $114.1 billion in December and $1.052 trillion in 2025 were 8.5% and 6.0% wider than those a year earlier. Exports expanded year-on-year by 6.6% in December and 5.5% in 2025, while imports were were up 5.7% in December but unchanged on average between 2024 and 2025.
Indian wholesale price inflation ended last year at a 9-month high but only 0.8%.
Consumer price inflation in December rose to a 3-month high of 0.2% in Finland but decelerated to a 14-month low of 3.3% in Hungary, an 8-month low of 3.3% in Croatia, and a 5-month low of 9.7% in Romania.
Japanese machine tool orders climbed 10.6% on year in December and by 8.0% in 2025 as a whole.
Australian consumer confidence slipped 1.7% this month. That was the fourth decrease in five months, leaving the reading 6.4% below its level last August. On a brighter note, Australian building permits were 20.2% greater in December than a year earlier.
All three measures of year-on-year producer price inflation in the United States exceeded expectations. The rate of total PPI inflation accelerated to 3.0% in November, a two-month high, from 2.8% in October. Producer price inflation excluding food and energy was also 3.0%, a 4-month higher and up from 2.6% as recently as September. When excluding trade as well as food and energy, PPI inflation printed at and 8-month higher of 3.5%, more than a half percentage point greater than anticipated.
The $226.4 billion U.S. current account deficit during the third quarter of 2025, although at a 7-quarter low somewhat smaller than forecast, exceeded 200 billion dollars for the 18th consecutive quarter. Moreover, the year-to-date $915 billion shortfall was still 4.8% wider than the accrued deficit over the first three quarters of 2024. Reducing U.S. external deficits is a core economic policy priority of the Trump Administration.
U.S. retail sales rose 0.6% in November, exceeding expectations, but still resulting in the smallest 12-month rate of increase (3.3%) in 13 months.
U.S. mortgage applications leaped 28.5% last week as the 30-year fixed mortgage rate fell seven more basis points to its lowest level (6.18%) since the week of September 20, 2024.
As at the National Bank of Serbia earlier this week, officials at the National Bank of Poland today left their policy rate unchanged. Neither monetary authority had been expected to change its monetary stance this month. But unlike Serbia, where the last interest rate change (a cut of 25 basis points to 5.75%) had been done in April 2024, the key Polish central bank interest rate was sliced at six monthly reviews during 2025 including the last four of the year and by a total of 175 basis points. Poland’s central bank interest rate will continue to be at 4.0%, its lowest level since early 2022 and well below a peak of 6.75% maintained from October 2022 until September of 2023. Poland’s inflation rate last month ticked 0.1 percentage point lower to 2.4%, crossing over the 2.5% midpoint of the central bank’s target, but officials are unsure that it will stay on target in light of geopolitical tensions and Poland’s need to ramp up defense expenditures in case neighboring Russia sets its eye on other Eastern European countries.
ECB Vice President de Guindos also warned of elevated geopolitical dangers and elevated risks to financial markets.
A ruling on the legality of President Trump’s tariffs was not among the several announced today by the Supreme Court. Dates for subsequent ruling announcements have not been revealed. Meantime, U.S. existing home sales last month were reported to have risen by a much greater-than-expected 5.1% to a 33 month high. This follows news that new home sales in August-October were 13.4% above the prior three-month average. While 2025 was among the worst years for U.S. home buyers in decades, the year ended on an improving note. U.S. equities are experiencing another difficult session this Wednesday, and now market participants await the release by the Federal Reserve of its Beige Book that documents regional economic trends since the last FOMC meeting in the central bank’s twelve districts. These get released today at 14:00 EST.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Chinese trade surplus, Indian wholesale prices, National Bank of Poland, National Bank of Serbia, U.S. PPI and current account, U.S. retail sales and mortgage applications
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