[Good Morning Market] "Tariffs Are Illegal" U.S. Ruling Expected to Have Limited Impact on Domestic Stocks

As uncertainty grew following a U.S. court ruling that the reciprocal tariffs imposed by President Donald Trump were illegal, all three major New York stock indexes closed lower. While the domestic stock market is also expected to be affected to some extent, the decline is projected to be limited.

On September 2 (local time) at the New York Stock Exchange, the Dow Jones Industrial Average closed at 45,295.81, down 0.55% from the previous trading day. The S&P 500 Index finished at 6,415.54, a drop of 40.69% from the previous session, while the tech-heavy Nasdaq Composite Index ended at 21,279.63, down 0.82% from the prior day.

New York Stock Exchange. Photo by Reuters and Yonhap News Agency

The market was dampened after the Federal Court of Appeals ruled that most of the global tariffs imposed by President Trump were illegal. On August 29, the Federal Court of Appeals ruled by a 7-4 vote that President Trump’s broad imposition of tariffs under emergency powers was unlawful.

As uncertainty over tariff policy increased, the bond market became volatile. The yield on the 10-year U.S. Treasury rose to 4.28%, and the 30-year yield surpassed 4.97%. On the same day, long-term government bond yields in major European countries such as the United Kingdom, Germany, and France also hit their highest levels in years due to concerns over worsening fiscal conditions, further intensifying worries across the global bond market. Since bond yields and bond prices move inversely, a rise in bond yields means a decline in bond prices.

However, the impact on the domestic stock market is expected to be limited. Han Ji-young, a researcher at Kiwoom Securities, noted, "It is also worth paying attention to the fact that the U.S. federal court decided Google does not have to sell its Chrome browser, which had faced antitrust issues." She added, "As a result, Alphabet surged by 7-8% in after-hours trading, and Apple also showed a strong after-hours performance of around 3%. The strength of these major U.S. tech stocks is expected to help narrow intraday losses in the domestic market." On September 2, the U.S. District Court in Washington, D.C. ruled that Google does not have to sell its Chrome browser to resolve its illegal monopoly in the online search market.

The researcher further analyzed, "From a global perspective, including the United States, the growth momentum of artificial intelligence (AI) stocks remains intact. From a domestic perspective, expectations for governance changes are being maintained, such as the passage of the first to third amendments to the Commercial Act. This is noteworthy." She explained that this would help support the overall market on the downside, even if there is an additional sharp decline in stock prices.

She continued, "It is also worth recalling that in periods of rising external uncertainty, companies with solid earnings forecasts tend to show relatively resilient stock performance. At this point, sectors such as securities, shipbuilding, trading, capital goods, hotels and leisure, semiconductors, and automobiles-which are seeing improved third-quarter operating profit forecasts compared to the KOSPI-are considered viable alternatives."