Even though President Donald Trump often argues the US economy is booming under his watch, he warned Friday of a 1929-style crash if courts strike down his use of emergency powers to justify sweeping tariffs.
“If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor,” Trump said in a Truth Social post. “It would be 1929 all over again, a GREAT DEPRESSION!”
The US Court of International Trade in May ruled that Trump overstepped his legal authority to impose many of his sweeping tariffs on foreign goods. Last week, the United States Court of Appeals for the Federal Circuit heard the Trump administration’s appeal, and the panel of 11 judges voiced skepticism that the law gave Trump power to impose tariffs in the aggressive manner that his administration has unleashed them. The appeals court judges have yet to issue their ruling on the case, which is expected to be appealed to the Supreme Court.
Trump on Friday warned that a ruling against his emergency powers would be a “judicial tragedy” the United States would have “no way” of recovering from.
“If they were going to rule against the wealth, strength, and power of America, they should have done so LONG AGO, at the beginning of the case,” Trump said.
The comments stunned some observers, in part because it’s unusual for a sitting US president to warn of economic catastrophe – but also because Trump’s tariffs have been largely viewed as a risk to the US economy.
“If courts shoot down the tariffs, it would be complicated – but a huge positive,” Art Hogan, chief market strategist at B. Riley Wealth Management, told CNN. “There would be a massive celebration.”
Trump correctly noted that tariff revenue has skyrocketed this year because of his unprecedented trade policy. However, Gregory Daco, chief economist at EY-Parthenon, said the new tariff revenue of roughly $70 billion to $80 billion over last year is a “drop in the bucket” of the nearly $7 trillion the federal government spent last year.
“The view that returning the custom duties would lead to a depression is largely misguided,” Daco said in a phone interview. “It’s not going to make or break much.”
Daco argued that if a court ruling forced Trump to slash tariff rates – and that’s a big if because the president has other authorities he could turn to – it wouldn’t be a negative at all.
“It would actually be stimulative,” Daco said.
During Trump’s Friday post on Truth Social, he also credited his trade strategy with boosting the US stock market.
“Tariffs are having a huge positive impact on the Stock Market,” Trump said. “Almost every day, new records are set.”
While it’s true that US stocks have surged to all-time highs this summer, analysts say tariff revenue is not a factor.
“That’s unambiguously backwards,” Hogan said of the argument that tariffs are lifting stocks. “The trade war, when it started, caused one of the steepest market downturns since the 1990s.”
The market recovery only began when Trump on April 9 paused his alarmingly-high tariffs.
“The only thing the market is celebrating is that we’re seeing tariff frameworks that are better than worst-case scenarios,” Hogan said. “The investment community gets the joke: These tariffs will slow growth and they’re being paid by consumers. This is a shadow tax. Everyone on Wall Street knows that.”
