Stock futures are jumping after a federal court late Wednesday froze most of the tariffs the Trump administration has imposed on U.S. trading partners.
The U.S. Court of International Trade ruled President Trump had overstepped his legal authority in assessing a 10% levy in an April 2 barrage of tariffs he referred to as “Liberation Day.” The court also blocked a separate set of U.S. duties on China, Mexico and Canada.
Futures on the S&P 500 were up 67 points, or 1.1%, to 5,969 as of 7:27 a.m. EST, while contracts on the Dow Jones Industrial Average and Nasdaq Composite rose 0.5% and 1.6%, respectively.
“Just when traders thought they’d seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific,” Stephen Innes of SPI Asset Management said in a report.
Overseas markets also rose following the surprise legal decision. In early European trading, Germany’s DAX gained 0.5% and France’s CAC 40 added 0.9%. In Asia, Japan’s Nikkei 225 index surged 1.9%. America’s largest ally in Asia had urged Mr. Trump to cancel the tariffs on imports from Japan and to also halt 25% tariffs on steel, aluminum and autos.
The ruling by the three-judgel panel means the baseline 10% tariff; so-called reciprocal tariffs on dozens of other nations that the U.S. had paused for 90 days; a 20% levy on China related to fentanyl; and a 25% tax on certain imports from Canada and Mexico are void. The court gave the Trump administration 10 days to issue new orders canceling the tariffs.
The Trump administration had cited the International Emergency Economic Powers Act of 1977, or IEEPA, which gives the president the power to regulate imports during certain emergencies. But the court rejected the government’s interpretation of the law. The Trump administration said it will appeal the ruling to the Federal Circuit Court of Appeals.
“If the Trump administration loses its appeal, then it will reduce the downside risks to the economy and the upside risks to inflation if no other tariffs are imposed,” analysts with Capital Economics told investors in a client note.
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