May 29, 2025 – U.S. stock futures surged and the dollar strengthened against safe-haven currencies like the yen and Swiss franc on Thursday after a federal court blocked President Donald Trump’s sweeping “Liberation Day” tariffs. The U.S. Court of International Trade in New York ruled on May 28 that Trump exceeded his authority by imposing across-the-board duties on imports from nearly all U.S. trading partners, delivering a significant blow to his signature trade policy.
The court’s unanimous decision, issued by a three-judge panel appointed by Presidents Reagan, Obama, and Trump, found that the International Emergency Economic Powers Act (IEEPA), which Trump invoked to justify the tariffs, does not grant the president “unbounded authority” to impose universal import levies. The ruling also struck down specific tariffs on China, Mexico, and Canada aimed at curbing drug trafficking, stating they failed to directly address the stated threats. The court ordered a 10-day window for the administration to halt these tariffs, though the Trump administration swiftly filed an appeal, signaling a likely battle in higher courts, potentially reaching the Supreme Court.
Market Reaction: The S&P 500 E-mini futures climbed 1.5%, with Dow futures jumping 500 points, reflecting investor relief over reduced economic uncertainty. The U.S. dollar rallied, gaining 0.7% against the yen to 145.83 and 0.8% against the Swiss franc to 0.8339. Asian markets, including Japan’s Nikkei 225 (up 1.5%) and Shanghai Composite (up 0.7%), also rose, though analysts cautioned that the response was tempered by the prospect of appeals.
Legal Context: The ruling stemmed from two lawsuits: one by 12 Democratic-led states, including Oregon and New York, and another by the Liberty Justice Center on behalf of five small U.S. businesses, such as V.O.S. Selections, a New York wine importer, which argued the tariffs threatened their survival. The plaintiffs contended that the U.S. Constitution grants Congress exclusive authority over commerce, and that the trade deficit—cited by Trump as a “national emergency”—did not meet IEEPA’s requirement of an “unusual and extraordinary threat.” The court agreed, calling the tariffs “ultra vires and contrary to law.”
Implications and Uncertainty: Analysts described the ruling as a “speedbump” rather than a final resolution, given Trump’s appeal and potential for narrower, sector-specific tariffs under other laws, like Section 232, which covers existing steel and aluminum duties. “It’s massive news,” said Kyle Rodda of Capital.com, noting the constitutional debate over tariff powers. However, he warned that the administration might ignore the ruling, risking institutional strain. Markets are expected to remain volatile as investors await clarity from the U.S. Court of Appeals for the Federal Circuit and possibly the Supreme Court.
Critics and Supporters: Oregon Attorney General Dan Rayfield hailed the decision as a victory for “working families and small businesses,” while White House spokesperson Kush Desai criticized it, arguing that “unelected judges” shouldn’t dictate responses to a trade deficit-driven “national emergency.” Posts on X reflected mixed sentiment, with some calling it a market-friendly move and others, like Goldman Sachs, labeling it a “nothingburger” due to potential workarounds.
The ruling offers temporary relief for businesses and consumers facing higher costs but leaves Trump’s trade agenda in limbo, with global trade talks and economic stability hanging in the balance.