#refund

Treasury yields jumped on Tuesday to begin September trading as a court decision knocking down most of the Trump administration’s tariffs raised the prospect of the government having to repay the money already brought in, stretching an already-stressed U.S. fiscal situation.

U.S. President Donald Trump’s tariffs are in focus after a federal appeals court on Friday ruled that most of his global tariffs are illegal. The court determined in a 7-4 ruling that only Congress has the power to implement sweeping levies. Trump responded that the decision was “highly partisan” and that he will be appealing the ruling to the U.S. Supreme Court.

“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said. The duties remain in place for now, however.

While Trump’s tariffs had initially raised worries about inflation, driving yields higher, the market view changed over the summer with bond investors heartened by the revenue raised from the duties. Tariffs are set to bring in $172.1 billion in 2025, according to the Tax Foundation, which would be a nice financial boost to a country with a ballooning budget deficit.