In a significant development, the US Supreme Court issued a ruling on last Friday that prevents the US President from imposing tariffs, determining that such actions exceed presidential authority and are illegal, as congressional approval is necessary to implement tariffs, which was not acquired.

This means that the refund process could amount to anywhere between USD 120 billion and USD 175 billion, with some estimates suggesting that under the International Emergency Economic Powers Act (IEEPA), the figure could be approximately USD 130 billion. The total potential tariff collection could be nearly double that amount.

However, this will be a challenging task, as the court has warned it could become chaotic due to the involvement of millions of producers and consumers.

US importers and businesses that have paid duties to Customs will be the ones benefiting from these refunds. Politicians are already urging the administration to issue the refunds directly via checks. Technically, if the tariff refunds are distributed, prices should decrease. However, history shows that business owners often only partially pass on cost savings to consumers, which could also help alleviate inflationary pressures to the certain extent.

President Donald Trump has indicated that he has a contingency plan regarding tariffs, suggesting that this issue will continue to persist and could bring uncertainty into the global financial market.

This latest development does not signify the conclusion of the trade war, as the administration is likely still exploring other avenues.

Although the Supreme Court has overruled the administration’s authority, the US President quickly announced a 10% global tariff on imports from all countries through an executive order, which can remain in effect for up to 150 days without congressional consent, aimed at addressing balance of payments issues.

Meanwhile, last week’s release of the Federal Reserve’s minutes indicated a lack of consensus on potential rate cuts, showing divided opinions among members. It noted that while inflation has eased from previous highs, it remains elevated compared to the 2% target, suggesting that any decision to lower rates may be postponed as concerns about inflation still prevail. The decision on timing for any rate reductions will largely depend on upcoming US economic data, which currently does not support a rate cut in March.

In other developments, tensions between the US and Iran continue to overshadow the market, with no clear indication of what the future holds. The second round of negotiations is currently taking place, leaving market observers speculating on whether diplomatic efforts will succeed or if the US will resort to military action should discussions fail.

The influence of geopolitical risks on the financial market is selective. Oil prices remain elevated, while gold and silver consistently attract buyers when their prices decline.

In terms of other asset prices, market participants are exercising caution in their selections. The dollar has also strengthened against major currencies.

In addition, the fourth quarter US GDP dropped significantly to 1.4 percent, falling short of the anticipated 2.8 percent, a reflection of the severe effects of the longest government shutdown in US history. Furthermore, the trade deficit widened in December.

On a more positive note, recently released data on durable goods orders, industrial production, and manufacturing output has shown improved results.

Meanwhile, the recent spike in gold prices over the past few days can primarily be attributed to safe-haven demand amid ongoing geopolitical uncertainty.

The US Supreme Court’s decision regarding tariffs has also pushed gold prices above USD 5,100. A similar response in Asia may be expected on Monday, but I doubt gold will see significant immediate gains without fresh updates from the Middle East or a major announcement from the US regarding tariffs.

This suggests that although gold may rise, it could just as easily fall back at the same rate without new information from either front.

Nevertheless, the global financial market seems poised for another period of volatility unless a clear direction emerges.

WEEKLY OUTLOOK — FEB 23-27

GOLD @ USD 5104— To maintain its upward trajectory, gold must surpass the resistance level of USD 5190 to target USD 5260 and higher. A failure to rise could lead to a decline. If it drops under USD 4960, we may see a test of the support level at USD 4880. But for more losses to occur, it needs to fall below that support level. Otherwise, gold is likely to remain in a volatile trading range.

EURO @ 1.1782— Euro has solid support at 1.1685 and is likely to hold above that level. If it breaks through 1.1860, it could lead to a rise toward 1.1905. Alternatively, there is support at 1.1625.

GBP @ 1.3484— As long as the Pound Sterling can maintain the support level of 1.3340, it is anticipated to gradually strengthen. A move above 1.3590 is required to test 1.3635.

JPY @ 155.07— The USD/JPY pair needs to break above 156.70 to continue its upward trend for 157.40. While it remains below this level, Yen buyers will keep purchasing USD during price declines. Support levels are at 154.05 and 153.20.

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