New Uncertainties About Trade Tariffs Set the Stage for September Sell-Off

Barry Adams
02 Sep, 2025
New York City

Stock market indexes faced a selling pressure after a second U.S. court challenged the legality of sweeping tariffs imposed by the Trump administration. 

The latest court ruling adds another twist to the erratic tariff implementation, and the sharp escalation in import duties is expected to increase goods prices and contribute to inflationary forces over the next twelve months. 

Investors are worried that the Trump administration's aggressive push to appoint policy committee members that are sympathetic to the Republican Party's agenda could severely undermine policymaking and the Fed's credibility.

 

Trump's Tariffs Face Legal Headwinds

The U.S. Court of Appeals ruled Trump's tariffs as illegal, citing that only the U.S. Congress has the authority to impose taxes on imports.

The U.S. Court of Appeals for the Federal Circuit, in a 7-4 decision, said that the law invoked by the U.S. president doesn't grant him powers to impose expansive taxes.

For now, the appeals court allowed tariffs to stay till October 14, allowing the Trump administration to seek a verdict from the U.S. Supreme Court. 

Trump's tariffs were ruled illegal for the second time, and there are at least two federal cases challenging the U.S. president's use of the International Emergency Economic Powers Act, or IEEPA, to impose a broad range of aggressive tariffs.

 

Week Ahead

In the week ahead, U.S. investors are awaiting the release of the jobs report and the trade balance report. 

The U.S. government agencies are set to release August's nonfarm payrolls, wage growth, jobless rate, and the JOLT report. 

Investors are anticipating the jobless rate to increase to 4.3% and wages to advance 0.3% from the previous month, and nonfarm payrolls are expected to increase at a faster pace than in July.

The international trade deficit in July is expected to expand to close to $70 billion, driven by the faster increase in imports than exports.

On the earnings front, Salesforce.com, Figma, GitLab, Broadcom, Dollar Tree, DocuSign, Ciena, RH, Lululemon, Toro, Costco Wholesale, and Children's Place are set to release their quarterly results. 

 

U.S. Stock Movers 

Kraft Heinz Co. increased 0.2% to $28.02, and the food products company confirmed its plans to separate into two companies. 

The tax-free spinoff is expected to be completed in the second half of next year. 

Signet Jewelers Ltd. advanced 6.2% to $93.50 after the specialty retailer's quarterly results surpassed market expectations. 

Revenue in the fiscal second quarter ending on August 2 increased 3% to $1.5 billion, driven by a same-store sales increase of 2%. 

The price increases drove gross  margin expansion by 60 basis points 38.6%

Net loss in the quarter shrank to $9.1 million from $101.5 million, and diluted loss per share eased to 22 cents from $2.28 a year ago. 

Signet declared cash dividend of 32 cents per share on November 21 to shareholders on record on October 24. 

The company revised the full-year fiscal 2026 sales estimate from the previous range between $6.57 billion and $6.80 billion to a new range between $6.67 billon and $6.82 billion. 

Same store sales growth estimate was revised to between a decrease of 0.75% and an increase of 1.75% from the previous estimate between a decline of 2.0% and an increase of 1.50%. 

The company guided adjusted annual diluted earnings per share to a new range between $8.04 and $9.57 from the previous range between $7.70 and $9.38.