Tariff Legal Durability Shapes Rates, Credit and Dollar

The consensus frames Trump-era tariffs as a one-time inflation impulse. In our reading, the data fit a different interpretation: legal durability, not the headline rate, is the variable more likely to determine the path for rates, credit, and the dollar. Five-year breakeven inflation round-tripped from 2.61 on March 31 to 2.25 on April 21 and recovered to 2.39 by October 7 ([FRED T5YIE]fred.stlouisfed.org), while HY spreads spiked from 3.42 to 4.61 in five days before retracing to 2.80 by October 3 ([FRED BAMLH0A0HYM2]fred.stlouisfed.org). That pattern is not consistent with a permanent price-level shift. It is consistent with regime uncertainty that markets keep trying to price as a shock and then unwind. CBP has already published guidance on the new CAPE functionality for the refund of IEEPA duties on certain entries, advising the Court of International Trade that the system is available ([CIT notice]cit.uscourts.gov). The legal pipeline is not hypothetical. Behind the paywall: why the dollar's persistent weakness complicates the one-shock story, what CPI and import-price data show about pass-through, and the specific prints and filings to watch this week.