A US court has ruled against President Trump’s sweeping tariffs, deeming many of them unlawful. This decision has sent ripples through global markets, initially sparking a rally in Asia, though uncertainty persists as the White House plans an appeal. The ruling primarily impacts tariffs imposed under the 1977 International Emergency Economic Powers Act.
On May 29, 2025, the US Court of International Trade delivered a significant blow to President Trump’s trade policy, ruling that his use of the 1977 International Emergency Economic Powers Act (IEEPA) to implement widespread tariffs was unlawful. This decision specifically targets the 10% baseline tariffs applied to nearly all US imports and other reciprocal tariffs, including some China-focused duties.
The court’s ruling does not affect tariffs on foreign steel, aluminum, and automobiles, which were imposed under different legal authorities.
The White House has swiftly filed a notice of appeal, indicating a prolonged legal battle.
Market Reaction and Lingering Uncertainty
Global financial markets reacted positively to the news, with Asian markets such as Tokyo and Seoul experiencing initial jumps of nearly 2%. The S&P 500 also saw an early gain before moderating. This optimism stems from hopes that a constrained Trump might be less able to trigger a recession through tariffs.
However, the excitement was tempered by the administration’s immediate appeal and the understanding that the ruling only addresses a portion of Trump’s tariff arsenal. Experts suggest that the administration could pursue tariffs through other legal avenues, such as:
Utilizing existing Section 301 authorities for tariffs on China.
Invoking Section 122, which grants the president the power to impose tariffs of up to 15% for 150 days to address trade deficits.
Initiating new Section 301 and 232 investigations for higher, more permanent tariffs.
Implications for Trade Wars and Businesses
The court’s decision creates a new layer of uncertainty for US importers and global trade. While it offers a reprieve for some, the potential for the Trump administration to find alternative methods to impose tariffs means that trade wars are far from over. This ongoing uncertainty continues to weigh on corporate America, with many companies struggling to provide accurate financial forecasts.
For instance, Best Buy experienced a 9.5% decline in its stock, partly due to concerns about tariffs affecting its revenue forecasts. Conversely, companies like Nvidia and C3ai saw significant gains, driven by strong earnings and the artificial intelligence boom, which helped offset broader market anxieties.
The Road Ahead
The legal dispute is expected to escalate to the US Court of Appeals for the Federal Circuit and potentially the Supreme Court. The Department of Justice argues that maintaining the ruling would be a “foreign policy disaster scenario” and would undermine ongoing trade negotiations. The outcome of these appeals will significantly shape the future of US trade policy and the global economic landscape.
Sources
Global markets rise after a US court blocked many of Trump’s sweeping tariffs, WSLS.
An April fool? Trump trade war backfires as court blocks US president’s tariffs, ITVX.
White House mulls options, Supreme Court appeal after trade court setback, Yahoo Finance.
US court rules against tariffs but ‘Trump 2.0 trade wars aren’t over yet’ :: Lloyd’s List, Lloyd’s List.
