A landmark decision from a US federal court has dealt a major blow to President Donald Trump’s trade policy, ruling that his administration overstepped its constitutional authority by imposing tariffs under the guise of a national emergency. The ruling has thrown Trump’s tariff regime into legal uncertainty and sent shockwaves through global trade negotiations.
In response to the court’s decision, US markets have shown a clear shift towards risk-on sentiment, with S&P 500 futures surging more than 1.3% in early trading. However, Bitcoin has lagged behind, only trading 0.4% higher. This divergence suggests a rotation back into traditional assets as investors see the ruling as a potential de-escalation of trade tensions.
The market’s reaction reflects a sense of legal finality conveyed by the court’s opinion. By ruling that the International Emergency Economic Powers Act does not authorize unilateral tariff policy, investors are optimistic that any reinstatement of the tariffs will face significant legal hurdles.
The court’s unanimous decision declared that Trump unlawfully used emergency powers to levy tariffs on nearly all US imports. While the tariffs were portrayed as part of a plan to rebalance US trade, the court found no legal basis for applying emergency powers to enact what amounted to a global tax policy.
The White House has already filed an appeal, pausing the court-ordered rollback of tariffs. The appeal process is expected to ultimately reach the US Supreme Court, leading to a prolonged legal battle.
If the ruling stands, importers who paid duties under the now-invalidated tariffs may be eligible for refunds, potentially totaling around $25-30 billion. The economic implications are significant, with businesses across various sectors closely watching the developments.
Global reaction to the ruling has been positive, with hopes of reduced trade tensions driving rallies in Asian markets. However, the longer-term impact on international trade remains uncertain, with trade partners potentially pausing negotiations until legal clarity is achieved.
The ruling could fundamentally alter the scope of presidential power in trade matters and reshape how future administrations approach global economic policy. Businesses, markets, and foreign governments will be closely monitoring the next steps in this legal battle to determine the future of Trump’s tariff legacy.