Stocks Surge After U.S. Court Blocks Trump’s Sweeping Tariffs
New York, May 29, 2025 – Global stock markets rallied on Thursday following a U.S. Court of International Trade ruling that blocked President Donald Trump’s broad tariffs, including the “Liberation Day” levies announced on April 2, as well as specific tariffs on China, Mexico, and Canada. The decision, which deemed Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose these tariffs unconstitutional, sparked optimism among investors, though uncertainty lingers as the administration vows to appeal.
The S&P 500, as shown in the finance card above, climbed 0.7% in early trading, reaching 589.975 USD, pulling within 3.5% of its all-time high after a 20% drop last month amid tariff-related fears. The Dow Jones Industrial Average rose modestly by 60 points (0.1%), while the tech-heavy Nasdaq surged 1.3%, buoyed by Nvidia’s strong earnings report. S&P 500 futures had jumped 1.4% in after-hours trading, reflecting initial market enthusiasm. Asian markets saw even stronger gains, with European indices like Germany’s DAX up 0.9% and France’s CAC 40 rising 1%, though the UK’s FTSE 100 only ticked up 0.1%.
The court’s ruling invalidated a 10% baseline tariff on most imports, 30% tariffs on China, and 25% levies on certain goods from Mexico and Canada, which Trump justified as addressing a “national emergency” tied to trade deficits and fentanyl trafficking. The judges argued that IEEPA does not grant the president authority to impose tariffs, a power reserved for Congress under the U.S. Constitution. The decision stemmed from lawsuits by 12 Democratic-led states and small businesses, including wine importer VOS Selections, which claimed the tariffs caused economic harm.
“This ruling reaffirms that trade decisions can’t be made on the president’s whim,” said Oregon Attorney General Dan Rayfield. However, White House spokesperson Kush Desai countered, “It’s not for unelected judges to decide how to address a national emergency,” signaling a swift appeal to the U.S. Court of Appeals for the Federal Circuit, with potential escalation to the Supreme Court.
Analysts noted that while the ruling reduces the immediate threat of a trade war, it does not affect sector-specific tariffs on steel, aluminum, and autos, imposed under different laws like Section 232 of the Trade Expansion Act. Goldman Sachs economists suggested Trump could pursue alternative legal avenues, such as Section 301 investigations, to reinstate tariffs, though these require lengthier processes. “This is a setback, but it might not change the final outcome for major trading partners,” said analyst Alec Phillips.
Market reactions were tempered by ongoing uncertainty. “The bar is raised for Trump to resurrect his tariffs, but he can still impose significant levies through other means,” said Brian Jacobsen, chief economist at Annex Wealth Management. Posts on X echoed this sentiment, with some users noting that the administration’s appeal and potential workarounds could prolong volatility.
The ruling comes amid recent trade developments, including a U.S.-China agreement slashing tit-for-tat tariffs and a U.S.-UK deal reducing duties on cars and steel. However, negotiations with the EU remain tense, with a 50% tariff threat paused until July. The decision has eased recession fears, with U.S. Treasury yields holding steady at 4.45% for the 10-year note, reflecting cautious optimism.
As the Trump administration explores legal and legislative options, businesses face continued uncertainty, with analysts predicting markets may fluctuate as further court rulings and trade talks unfold. For now, the stock surge reflects relief, but investors remain vigilant for the next twist in this high-stakes trade saga.