Markets digest a rare double hit: climate rollback and tariff whiplash

NEW YORK — Investors spent the week parsing two big U.S. policy signals that don’t usually land on the same tape: a sweeping climate rollback that could reshape emissions regulation for years, and renewed tariff uncertainty that has already pushed volatility higher across stocks, bonds and currencies.

On the climate front, the Environmental Protection Agency moved to revoke the 2009 “endangerment finding,” the scientific determination that greenhouse gases endanger public health and welfare and therefore must be regulated under the Clean Air Act. The finding has served as the legal foundation for federal limits on planet-warming pollution from vehicles and other major sources, and its repeal is expected to spark a fast-moving court fight with major implications for future rulemaking.

Markets care less about the politics than the spillover: regulatory uncertainty changes planning for automakers, utilities, and any company that has to juggle U.S. rules alongside state or overseas standards. Some business voices have welcomed regulatory relief, while others have warned that abrupt shifts can add compliance complexity and legal risk.

At the same time, investors have been dealing with tariff “whiplash” — the kind of policy uncertainty that can move prices even before any tariff is implemented. Reuters has reported that volatility gauges jumped as markets reacted to renewed tariff threats, with stocks, long-dated U.S. Treasuries and the dollar all seeing sharp moves during periods of heightened trade headlines.

In foreign exchange markets, large institutions are watching the politics as closely as the economic data. BNY said clients have been hedging U.S. dollar exposure at the highest levels since late 2023, reflecting caution about volatility even as many investors continue to hold U.S. stocks and bonds. The Financial Times has also noted that political risk has increasingly been treated as a driver of the dollar’s direction, sometimes overriding the usual relationship between the currency and interest rates.

Taken together, the week underscored a theme that traders often repeat: uncertainty itself is a market factor. A climate policy reset can alter multi-year investment assumptions, while tariff turbulence can hit pricing, supply chains and inflation expectations quickly. And when both land at once, investors tend to respond the same way — by demanding a little more clarity, or a little more protection, before taking their next big bet.