On Truth Social on 8/8/2024, former President Donald Trump said import tariffs are having a "very positive impact" on the US stock market. Major Wall Street indexes recently hit new highs. At the close of trading on 8/8, the Nasdaq Composite rose 0.98% to a record 21,450 points. "In addition, hundreds of billions of USD are flowing into our country's budget," he wrote.

He warned, "If a far-left court rules against us at this late date, to diminish or interrupt the greatest inflow of money, wealth, and influence that America has ever had, we will never get those things back. It will be like 1929, the Great Depression.".

During the Great Depression of 1929-1933, the US economy contracted for 43 consecutive months. The unemployment rate even rose to nearly 25%, then gradually decreased, but remained above 10% for the entire decade.

Former President Donald Trump speaks at the White House on 14/7. Photo: AFP

Former President Donald Trump speaks at the White House on 14/7. Photo: AFP

In late May, the Court of International Trade (CIT) in Manhattan blocked most of the import tariffs Trump had previously imposed on trading partners. They argued he had exceeded his authority by invoking the IEEPA when imposing tariffs. The blocked tariffs included retaliatory tariffs and previous tariffs on Mexico, Canada, and China related to immigration and fentanyl. The US government appealed the ruling immediately.

A day later, the Federal Court of Appeals for the Washington Circuit stayed the lower court's ruling to consider the US government's appeal. However, in a hearing last week, the 11-judge panel expressed skepticism that the law allowed Trump to impose tariffs in this way. They have not yet issued a ruling, and the case will likely be appealed to the Supreme Court.

Trump warned that a ruling against his tariffs would be a "judicial disaster." "If they wanted to rule against the wealth, power and prestige of the US, they should have done it long ago, right at the beginning of the case," he wrote.

These comments surprised observers, as it is rare for a sitting president to warn of economic disaster. Experts also suggest that the import tariffs themselves are a threat to the US economy.

"If the court rejects the import tariffs, it will complicate matters. But a lot of people will celebrate," said Art Hogan, market strategist at B. Riley Wealth Management.

US tariff revenue has soared this year, thanks to Trump's unprecedented trade policies. On 7/8, US Commerce Secretary Howard Lutnick estimated the country would collect more than $50 billion per month from import tariffs.

However, Gregory Daco, chief economist at EY-Parthenon, said this figure is insignificant compared to the nearly $7,000 billion in government spending last year. "The view that having to refund tariff revenue will lead to a recession is unfounded. It won't make or break anything significant," Daco said.

Trump's argument that the stock market is rising thanks to import tariffs has also been met with skepticism. "When it first began, the trade war caused one of the biggest market drops since the 1990s," Hogan explained. The market only recovered after Trump postponed tariffs from 4/9.

"The only thing the market is celebrating is that countries have reached a trade framework agreement with the US, avoiding the worst-case scenario," he affirmed.

Ha Thu (CNN, Reuters)