Is the tariff turmoil over?
U.S. stock markets were surging at the possibility early Thursday after a federal trade court ruled that the Trump administration didn’t have the authority to impose most of its announced levies. A positive earnings report from chip maker Nvidia was the cherry on top.
Dow Jones Industrial Average futures were rising 553 points, or 1.1%. S&P 500 futures were gaining 1.6% and Nasdaq 100 futures were up 1.9%.
The US Court of International Trade ruled that President Donald Trump didn’t have the authority to impose sweeping tariffs under the International Emergency Economic Powers Act of 1977. Lawyers for the Trump administration notified the court they will appeal.
Congress typically holds responsibility over tariffs but has delegated many powers to the president over decades and Trump said the ongoing U.S. trade deficit had created a national emergency which justified the levies under the IEEPA.
If upheld, the ruling means the administration must find another justification for its tariff policy.
“This ruling is a marginal positive,” wrote Gavekal Research analyst Will Denyer. “It could at least succeed in slowing the imposition of punitively high tariff rates, which would give investors and businesses more time to adjust. And it is encouraging to see the rule of law being upheld by the courts. The problem is that over the years Congress has written laws that give the president many ways to impose tariffs.”
The yield on the benchmark 10-year Treasury note stood at 4.531% early on Thursday, ticking up from the previous day. The DXY Dollar Index, which tracks the value of the currency against a basket of major peers, was up 0.2%.
The tech-heavy Nasdaq was set to outperform on Thursday, likely due to a boost to the artificial-intelligence trade from Nvidia.
Nvidia gained almost 5% in after-hours trading on Wednesday following a first-quarter report which showed revenue and earnings ahead of expectations, although its guidance was short of consensus projections as it expects an $8 billion hit to revenue from restrictions on sales in China.