Trade War Nears End as Courts Weaken Trump Tariffs

Fundstrat's chief investment officer, Tom Lee, has asserted that President Donald Trump's trade war is approaching its conclusion as the White House faces a series of legal setbacks. In a recent video update on the Fundstrat Capital YouTube channel, Lee highlighted that recent court rulings against Trump's tariffs indicate a diminishing leverage for the White House.

Lee pointed out that on May 28th, the international trade court ruled against the Trump tariffs, although it did not remove all of them. Additionally, on May 29th, DC District Court Judge Contreras ruled that the tariffs are illegal. Despite these rulings, the Federal Court of Appeals issued an administrative stay on the same day, reinstating the tariffs at least through June 9th. This complex legal landscape suggests that the White House is struggling to maintain its position on tariffs.

Lee emphasized that the White House's insistence that nothing has changed after the tariff rulings is becoming increasingly untenable. He noted that while there are many measures the White House can take to implement or re-implement tariffs, the overall trend indicates a loss of leverage. This situation is pushing the trade war closer to its endgame, according to Lee.

Lee also suggested that due to these legal challenges, Trump will find it difficult to revive the trade war. Consequently, the White House is likely to seek an exit strategy soon. He further noted that the improved visibility on tariffs and other factors have led to a more favorable investment outlook for stocks compared to earlier this year. Lee highlighted that the companies have survived a fifth major stress test, and the Federal Reserve is expected to be more dovish next year, contributing to a better investment environment.

In summary, the recent court rulings against Trump's tariffs have weakened the White House's position in the trade war, pushing it closer to an endgame. The improved visibility on tariffs and other economic factors have created a more favorable investment outlook for stocks. The White House is likely to seek an exit strategy soon, as the legal challenges make it difficult to sustain the trade war.