Expectations for Withdrawal of Reciprocal Tariffs
Macy's, Mattel, and Other U.S. Retail Stocks Surge
As the United States Supreme Court began hearings on the legality of tariffs imposed by President Donald Trump on countries around the world, the stock prices of U.S. retail brands such as department stores, toy manufacturers, and apparel companies surged. This was driven by expectations that the reciprocal tariffs might be withdrawn.
On November 5 (local time), shares of U.S. department store chains Macy's and Kohl's soared by 8.9% and 7.0%, respectively, on the New York Stock Exchange. Mattel, the manufacturer of Barbie dolls, rose by 4.0%, apparel company Lululemon increased by 4.3%, and home goods retailer Williams-Sonoma gained 2.6%.
On this day, the consumer discretionary sector recorded the second-highest rise among all sectors in the S&P 500 index.
This is interpreted as reflecting expectations that the U.S. Supreme Court could decide to withdraw the so-called reciprocal tariffs imposed by the Trump administration. On the same day, the Supreme Court held hearings to determine the legality of the broad tariffs imposed by the Trump administration on countries such as South Korea.
In April, President Trump declared a national emergency and announced that he would impose reciprocal tariffs on more than 100 countries based on the International Emergency Economic Powers Act (IEEPA). The main issue in the current hearing is whether IEEPA can serve as a legal basis for imposing tariffs.
Dave Lutz of JonesTrading told Bloomberg, "After today's Supreme Court hearing, betting markets have increased the likelihood that the Court will rule against the administration," adding, "As a result, many consumer goods stocks that had been affected by the tariffs surged."
Bloomberg reported, "Three conservative justices questioned President Donald Trump's use of the Emergency Powers Law to impose tariffs that became central to the global trade war," and predicted, "If a ruling is made against President Trump, importers could receive refunds exceeding $100 billion, and major burdens borne by companies could be eliminated."
Sarah Bianchi, a strategist at investment bank Evercore ISI, said in a note to investors, "The tone of this morning's Supreme Court hearing leaned against the IEEPA tariffs. The government's attorneys faced much sharper questioning." However, she also noted that the outcome could still go either way, and the final ruling could be delayed until as late as January next year.
U.S. betting sites are also leaning toward a loss for President Trump. On the prediction platform Kalshi, the probability of a Trump administration victory fell from about 50% to around 30%. On another prediction platform, Polymarket, the likelihood of a win, which exceeded 40% earlier this week, also dropped to about 30%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
