Trump tariff setback could hasten US debt ceiling deadline, says Barclays

By Davide Barbuscia

NEW YORK (Reuters) - A court ruling blocking most of U.S. President Donald Trump's import duties could add uncertainty around when the government will no longer be able to pay all its obligations without raising the U.S. debt ceiling, Barclays analysts said.

A U.S. trade court blocked most of President Donald Trump's tariffs in a sweeping ruling on Wednesday that found the president overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. The Trump administration filed a notice of appeal and questioned the authority of the court.

The U.S. government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap and risking a potential default.

"Additional tariff revenues were likely to push the x-date back and lack of those is likely to keep it around late August," Barclays analysts said in a note on Thursday. The so-called x-date is when the government will no longer be able to pay all its obligations.

"While the administration ultimately could pursue other avenues to achieve the same tariff rates, or it might prevail through the courts, that may not be resolved in short order so the x-date forecast remains quite in flux," they said.

The analysts had estimated the Treasury General Account would dip slightly below $100 billion before mid-September. After the court ruling, the X-date could fall in late August or early September, they said.

Treasury Secretary Scott Bessent this month urged lawmakers to extend the U.S. government's borrowing authority by mid-July, warning that there was a "reasonable probability" the federal government would run short of cash to cover its obligations by August.

Republicans who control the House of Representatives and the Senate are trying to advance a sweeping package of tax cuts and spending hikes that would also raise the debt limit by at least $4 trillion.

(Reporting by Davide Barbuscia; Editing by Nick Zieminski)