The Trump 2.0 trade war has created two distinct economic risks: one from the cost of tariffs for businesses and consumers, the other from the pall of uncertainty hanging over companies that rely on imports.

The big picture: The first of those has been diminished, and the latter worsened, after the Court of International Trade's ruling late yesterday that Trump overstepped his emergency authority with a sweeping new tariff regime.

• It means tariff relief in the near term, but a more complex outlook for policy in the medium term, as the ruling navigates appeals and/or the Trump administration seeks alternate legal approaches to accomplish its goals.
• There's a reason the S&P 500 is up only 1% in pre-market trading today, despite a seemingly big win for business interests. This could get messy, and nobody knows quite where it will lead.

By the numbers: The Yale Budget Lab's tally shows that, following yesterday's court action, the U.S. has an effective 6.9% tariff on all imports, down from 17.8% earlier this month. (It was around 3% when Trump took office.)

Catch up quick: The three-judge panel's ruling found that the International Emergency Economic Powers Act (IEEPA) of 1977, which Trump invoked to levy tariffs on nearly every good from every country, does not "confer such unbounded authority."

Yes, but: The president has several other tools of unilateral power over tariffs and trade that he could invoke, even if appeals courts uphold the trade ruling.

• They require more detailed legal processes, however — a comment period, a process for importers seeking exemptions, and so on — that are less conducive to Trump's favored across-the-board tariff-setting.

State of play: That toolkit includes some 1974 trade law callbacks from Trump's previous term, and potentially a new one, each known by the section of trade statutes from which the authorities derive.

• Section 301 authority allows the president to enact tariffs in retaliation for unfair trade practices in an industry by other countries, but only after a process of study and appeals. It has been used on many Chinese imports by both the first Trump and Biden administrations.
• Section 232 allows tariffs on goods found to have national security implications. Trump used it on steel and aluminum imports, including from allies.
• Section 122 allows something closer to Trump's all-tariffs-on-everybody strategy — but not indefinitely. It allows up to 15% tariffs without a formal review process, but only for 150 days.

Between the lines: That all tilts the balance toward tariffs on goods where there's a clear national security nexus or justifiable claims of unfair practices — and away from consumer goods like coffee, bananas, or t-shirts.

• It sets up a scenario where many items could still end up facing quite high tariffs, but only for strategic goods and only after more protracted procedures are followed.
• It implies less inflationary impact on Americans' day-to-day commodity goods and more of the burden falling on importers of industrial inputs, where the national security or unfair practices cases are stronger.
• Businesses get time to adjust — a double-edged sword, because it also means a longer period of uncertainty about what the endgame looks like.

The bottom line: "In macro terms, the trade shock may be less severe, but trade uncertainty may be prolonged in particular in strategic sectors, with some risk Trump lashes out to restore leverage," wrote Evercore ISI's Krishna Guha in a note.

The Trump administration has nine days to wind down the expansive tariff regime enacted under IEEPA, according to the ruling — unless the appeals court grants the White House a stay on the decision.

Why it matters: Millions of businesses — which will be owed refunds for these tariffs, if the decision is upheld — are in a new state of limbo as the case makes its way through the courts system, and possibly all the way to the Supreme Court.

What they're saying: "Obviously there will be an appellate process, but I'm guardedly optimistic," Ilya Somin, one of the lawyers who argued the case on behalf of small businesses, told reporters this morning.

• "We got a unanimous ruling from judges appointed by presidents of both parties — including one appointed by Donald Trump himself," Somin added, noting the appellate process could "work fast and be done within a few weeks."

The intrigue: Businesses could take advantage of this window and bring in imports — much like they have in recent months — in case the reduced tariffs don't stick.

• "There is a strong likelihood that the Appeals court will not issue a stay on the decision of the trade court. That would mean that for the next 4-8 weeks, there will be no fentanyl and no reciprocal tariffs," Ajay Rajadhyaksha, an economist at Barclays, wrote in a client note this morning.
• "In this case, we would expect substantial front-loading in the next two months — as companies (and households) try to get in as many goods as they can," Rajadhyaksha wrote.

The twist: The trade deficit is likely to continue to explode in the weeks ahead, mainly due to tariff-related uncertainty.

• "Between the front-loading before April, and what is now coming, the US trade deficit for H1 2025 is likely to be extremely large," Rajadhyaksha wrote, referring to the first half of 2025.