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US Supreme Court decision on tariffs – Key Takeaways
Guy Ertz, Deputy Global Chief Investment Officer, and Stephan Kemper, Chief Investment Strategist, BNP Paribas Wealth Management
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Key Messages

1. The Supreme Court of the United States (SCOTUS) struck down the Trump administration’s reciprocal tariffs. Over the weekend, President Trump already executed a new plan to reimpose tariffs, increasing global tariffs by 10% under Section 122.

2. In our view, the potential for less-than-full IEEPA tariff replacement or more consumer-friendly tariff composition tilts inflation risks to the downside and economic growth risks to the upside.

3. The biggest mispricing appears to be for bond yields as the Supreme Court decision poses a significant risk to the US fiscal outlook. We maintain our 12‑month target of 4.25% for the 10–year US government bond yield. Even if we keep the 4.25% assumption, there remains considerable upside from current levels. Accordingly, we recommend avoiding longer‑maturity US bonds.

4. We see little reason to change our current stance on US equities as the decision does not impact our core thesis. We remain Neutral on the US market as the S&P 500 should continue to struggle from the capex- monetization fears induced-underperformance of AI heavyweights. Within US equities we prefer cyclical sectors which should enjoy an ongoing tailwind from earnings and fiscal stimulus.

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