It has not even been two days since the Washington Post published its attempt to manipulate the dollar lower by claiming, falsely, that Trump intends to water down his sanctions, when moments ago the dollar soared on what is most likely another piece of fake news - and also just as likely another attempt by hedge fund "sources" to manipulate the FX market - when CNN reported that Trump "is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries." And unlike the WaPo's "three" so-called sources, in the quest for anonymous BS supremacy CNN went to cite a whopping "four sources familiar with the matter."
According to the report, which is likely just as "real" as the WaPo's fake news, the emergency declaration will allow Trump - who is pursuing a rebalancng of global balance of trade in his second term - to construct a new tariff program by using the International Economic Emergency Powers Act, known as “IEEPA,” which unilaterally authorizes a president to manage imports during a national emergency.
Trump, one of the sources noted, has a fondness for the law, since it grants wide-ranging jurisdiction over how tariffs are implemented without strict requirements to prove the tariffs are needed on national security grounds.
“Nothing is off the table,” said a second source familiar with the matter, acknowledging the robust discussion over declaring a national emergency that has taken place.
Of course, none of this is actually news! But sadly algos have a 15 millisecond memory so it all sounds exciting and grandiose to them. In 2019, Trump used IEEPA to threaten a 5% tariff on all Mexican imports that would rise to 25% if Mexico declined to take action to reduce the number of undocumented immigrants crossing the border with the United States. After Mexican officials traveled to Washington for a week of in-person negotiations – and an agreement was reached to reinstate the “Remain in Mexico” immigration policy – the tariffs were never implemented. But the specter of the potential action, predicated by a national emergency Trump had declared on the southern border three months earlier, led prominent business lobbying groups like the Chamber of Commerce and the Business Roundtable to prepare lawsuits challenging the legality of such a move.
Trump’s advisers are evaluating the possibility of using section 338 of US trade law, which allows a president to impose “new or additional duties” against countries deemed to be discriminating against the commerce of the United States. In those cases, trade law permits the president to impose new tariffs in direct reciprocation against those countries in specific product categories – though it’s been untested in recent history.
They’re also considering revisiting the trade law – known as section 301 – that ushered in Trump’s initial tariffs on China on national security grounds. The Biden administration left the vast majority of Trump’s tariffs in place – and increased tariffs on certain products like electric vehicles – providing a basis for the incoming president to increase or adjust the tariffs as he sees fit. But implementing tariffs under this statute requires a government investigation, and companies affected by the changes often lobby for months to be excluded from the levies.
More importantly, no final decision has been made on whether to declare a national emergency, sources told CNN. Trump’s team is still exploring other legal avenues to buttress the tariffs that Trump pitched on the campaign trail.
“I think the president has broad authority to impose tariffs for a variety of reasons, and there are a number of statutory bases to do so,” said Kelly Ann Shaw, a trade attorney who served as Trump’s deputy assistant for international economic affairs. “IEEPA is certainly one of them.”
In other words, this is just one camp of anon sources - those who are long the USD - firing back at those who were short the USD ahead of the WaPo fake news report seeking to send the dollar plunging (which they did). And sure enough, the dollar has soared in the immediate aftermath of the WaPo report, with the BBDXY surging 0.6% with cable leading losses; GBP/USD down as much as 1.2% to 1.2334, lowest since April, while UK bond yields rise...
... EUR/USD dropped 0.7% to 1.0273, eyes eyeing the 1.0223 Jan. 2 low...
... while the USD/JPY up 0.3% to 158.55, highest since July; and on the verge of sparking the next round of BOJ intervention.
Ultimately, expect everything to revert to normal as FX traders recall that this kinda of verbal rollercoasters were all the rage for 4 years during Trump's first admin, only for the new generation of traders and algos, all of this seems so new and exciting, they can't help themselves but to overtrade on the flashing red headline.
It has not even been two days since the Washington Post published its attempt to manipulate the dollar lower by claiming, falsely, that Trump intends to water down his sanctions, when moments ago the dollar soared on what is most likely another piece of fake news – and also just as likely another attempt by hedge fund “sources” to manipulate the FX market – when CNN reported that Trump “is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries.” And unlike the WaPo’s “three” so-called sources, in the quest for anonymous BS supremacy CNN went to cite a whopping “four sources familiar with the matter.”
According to the report, which is likely just as “real” as the WaPo’s fake news, the emergency declaration will allow Trump – who is pursuing a rebalancng of global balance of trade in his second term – to construct a new tariff program by using the International Economic Emergency Powers Act, known as “IEEPA,” which unilaterally authorizes a president to manage imports during a national emergency.
Trump, one of the sources noted, has a fondness for the law, since it grants wide-ranging jurisdiction over how tariffs are implemented without strict requirements to prove the tariffs are needed on national security grounds.
“Nothing is off the table,” said a second source familiar with the matter, acknowledging the robust discussion over declaring a national emergency that has taken place.
Of course, none of this is actually news! But sadly algos have a 15 millisecond memory so it all sounds exciting and grandiose to them. In 2019, Trump used IEEPA to threaten a 5% tariff on all Mexican imports that would rise to 25% if Mexico declined to take action to reduce the number of undocumented immigrants crossing the border with the United States. After Mexican officials traveled to Washington for a week of in-person negotiations – and an agreement was reached to reinstate the “Remain in Mexico” immigration policy – the tariffs were never implemented. But the specter of the potential action, predicated by a national emergency Trump had declared on the southern border three months earlier, led prominent business lobbying groups like the Chamber of Commerce and the Business Roundtable to prepare lawsuits challenging the legality of such a move.
Trump’s advisers are evaluating the possibility of using section 338 of US trade law, which allows a president to impose “new or additional duties” against countries deemed to be discriminating against the commerce of the United States. In those cases, trade law permits the president to impose new tariffs in direct reciprocation against those countries in specific product categories – though it’s been untested in recent history.
They’re also considering revisiting the trade law – known as section 301 – that ushered in Trump’s initial tariffs on China on national security grounds. The Biden administration left the vast majority of Trump’s tariffs in place – and increased tariffs on certain products like electric vehicles – providing a basis for the incoming president to increase or adjust the tariffs as he sees fit. But implementing tariffs under this statute requires a government investigation, and companies affected by the changes often lobby for months to be excluded from the levies.
More importantly, no final decision has been made on whether to declare a national emergency, sources told CNN. Trump’s team is still exploring other legal avenues to buttress the tariffs that Trump pitched on the campaign trail.
“I think the president has broad authority to impose tariffs for a variety of reasons, and there are a number of statutory bases to do so,” said Kelly Ann Shaw, a trade attorney who served as Trump’s deputy assistant for international economic affairs. “IEEPA is certainly one of them.”
In other words, this is just one camp of anon sources – those who are long the USD – firing back at those who were short the USD ahead of the WaPo fake news report seeking to send the dollar plunging (which they did). And sure enough, the dollar has soared in the immediate aftermath of the WaPo report, with the BBDXY surging 0.6% with cable leading losses; GBP/USD down as much as 1.2% to 1.2334, lowest since April, while UK bond yields rise…
… EUR/USD dropped 0.7% to 1.0273, eyes eyeing the 1.0223 Jan. 2 low…
… while the USD/JPY up 0.3% to 158.55, highest since July; and on the verge of sparking the next round of BOJ intervention.
Ultimately, expect everything to revert to normal as FX traders recall that this kinda of verbal rollercoasters were all the rage for 4 years during Trump’s first admin, only for the new generation of traders and algos, all of this seems so new and exciting, they can’t help themselves but to overtrade on the flashing red headline.
Loading…
