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The Supreme Court could rule as early as next month on whether President Trump exceeded his constitutional authority in imposing sweeping tariffs on U.S. trade partners under the International Emergency Economic Powers Act (IEEPA).
An adverse ruling for the administration could spark volatility across financial markets, particularly if it points to refunds of tariffs that have helped moderate the massive U.S. budget deficit. But trade lawyers and diplomats also see the administration as prepared to immediately re-impose tariffs under other, less sweeping legislation if needed, the Financial Times reported, with the mix depending on the details of the ruling.
“Nobody thinks the tariffs are going away,” Ted Murphy, a trade lawyer at Sidley Austin in Washington, told the newspaper. “They are just going to be reissued under a different umbrella. They will reissue tariffs the same day.”
Fed in no rush to cut in early 2026…Minutes of the Federal Reserve’s December policy meeting released Tuesday underlined the divisions that produced a 9-3 vote in favor of a quarter-point rate cut, but indicated most policymakers see scope for further easing. The three dissents were the most since 2019. “Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected,” the minutes said.
The minutes, however, also underscored that some policy makers saw no need to rush further cuts. “With respect to the extent and timing of additional adjustments to the target range for the federal funds rate, some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting,” the minutes said. “A few participants observed that such an approach would allow policymakers to assess the lagged effects on the labor market and economic activity of the Committee’s recent moves toward a more neutral policy stance while also giving policymakers time to acquire more confidence about inflation returning to 2 percent.”
The minutes didn’t move the needle when it comes to expectations in the fed-funds futures market. Traders on Tuesday afternoon priced in a 15.5% probability of a quarter-point cut at the Fed’s January meeting, little changed from 16.6% on Monday. Traders see a probability of around 40% for a quarter-point cut by the Fed’s June meeting and a 33% probability of half a percentage point worth of cuts by that date, virtually unchanged from Monday.
SovEcon raises Russia wheat export forecast…Black Sea grains consulting firm SovEcon lifted its forecast for Russian wheat exports for the 2025/26 season by 400,000 metric tons to 44.6 million tons, due to a “consistently strong export pace,” according to Dow Jones Newswires. SovEcon sees December exports at 4.2 million tons, up from 3.4 million tons a year ago.
“Russia’s export campaign started slowly this season but has accelerated to near-record levels. We do not rule out further upward revisions to the export forecast, though slow farmer selling and a strong ruble remain key headwinds,” SovEcon chief Andrey Sizov said in a note.
China aims to stabilize grain production…Chinese officials vowed to stabilize grain production and increase the country’s oilseed production capacity, Reuters reported, citing readouts of agricultural policy meetings. The pledges come as Beijing attempts to reduce imports and bolster food security. State news agency Xinhua, citing officials who attended the Central Rural Work Conference held this past week, said China must stabilize grain and edible oil production, improve grain varieties and enhance quality.
At a separate meeting, agriculture ministry officials called for an increase in yields of grain and oil crops and an improvement in the self-sufficiency rate of soybean oilseeds, according to a ministry statement and as reported by Reuters.