Doderer on economy: A narrow reacceleration and the offramp not taken

In total, this is supportive of the continued thesis that interest rates are not restrictive and there is no urgency to cut rates from here. That full case was made more in depth in last month’s column as I dug into the two sides of the dual mandate.

For this month, let’s look at how changes in tariff policy could impact the steel industry. Last Friday’s US Supreme Court decision in Learning Resources, Inc. v. Trump ruled that IEEPA does not authorize unilateral tariffs, striking down the reciprocal tariffs from Liberation Day. For mills and steel buyers, this changes nothing directly — those tariffs were based on Section 232 and remain firmly in place.

So why spend time on it? Because the narrowing of executive authority under International Emergency Economic Powers Act (IEEPA) presented a clear offramp. Instead, the near-immediate swerved to a 10% tariff under Section 122 of the Trade Act (with threats for more action) closed that door. If there was any doubt about the administration’s broader trade posture, that move removed it. Section 232 is not going anywhere.

The Court was clear that IEEPA does not provide tariff authority. What they did not provide was clarity on refunds. There is no automatic mechanism in the ruling and no requirement that previously collected duties flow back through supply chains. Even if refunds are pursued, they will take time and are likely to remain with the importer rather than cascade cleanly down to end users or consumers.

This legal reversal does not mean pricing reversal.

During the tariff period, prices moved higher – and most importantly, transactions cleared. The buyers showed a willingness to transact at those levels and producers learned from that experience. Tariffs functioned as a price umbrella, but the behavior that developed underneath that umbrella does not disappear simply because one statutory authority was removed. When margins expand, they are rarely surrendered voluntarily, particularly when alternative authorities remain available to the administration.

If refunds materialize, they are more likely to act as balance sheet cushions than as catalysts for lower prices. Liquidity does not equal disinflation.

There is also an important timing dynamic. If firms expect tariffs to be reconfigured rather than eliminated, the incentive becomes to accelerate imports while the window is open. That front-loading can create short-term volatility in trade flows and prices that has little to do with true end-use demand.

It is also worth remembering that some of the recent encouraging economic signals followed months of hesitation and deferred decisions. As the rules of the road became clearer, capital budgets began moving again. Now, the 150-day clock under Section 122 introduces another layer of uncertainty. Unless a firm is highly confident it will receive an IEEPA-related refund, the rational response may be to wait and see. That pause risks reintroducing the indecision that had only recently begun to lift.

So yes, the reacceleration in the US economy remains the base case primarily due to fiscal support from tax changes and a supportive wealth effect but it turns narrower and more fragile with this added layer of uncertainty. For steel and aluminum buyers, the takeaway is simple: assume tariffs, in some form, are here to stay; do not build strategy around potential refunds; and expect policy-driven volatility to persist. The offramp was visible but wasn’t taken.