Global markets rose Thursday after a federal court struck down most of President Trump’s sweeping tariffs on imported products from almost every country in the world, giving hope that his damaging trade war may be fizzling.
Wall Street jumped modestly at the opening bell and European and Asian markets also closed higher on news that the three-judge panel of the U.S. Court of International Trade ruled that Trump overstepped his authority by invoking the 1977 International Emergency Economic Powers Act to justify his trade war.
The court’s decision blocks the tariffs Trump slapped last month on almost all U.S. trading partners and levies he imposed before that on China, Mexico and Canada, citing a variety of reasons, including trade deficits that have been in existence for decades, illegal immigration and even trafficking in illicit fentanyl.
The panel ruled that Trump went far beyond the presidential authority to regulate imports and also said the tariffs did nothing to deal with problems they claimed to address, which in any case do not amount to any sudden emergency.
There was no immediate response from Trump himself, although he has previously railed against judges blocking portions of his agenda.
“It is not for unelected judges to tell the president how to address a national emergency,” the White House said in a statement.
“The judicial coup is out of control,” added Stephen Miller, the hardline White House deputy chief of staff.
Democrats cheered the ruling, with Sen. Chuck Schumer (D-New York) tweeting “Liberation Day,” a sarcastic dig at Trump’s trade war.
The administration may likely appeal the ruling to an appeals court in Washington, D.C., and ultimately to the conservative-dominated Supreme Court, where many legal challenges to Trump’s controversial agenda of executive actions are likely to be decided.
Team Trump may also seek to use different legal strategies to reimpose some of the tariffs the court struck down.
The ruling leaves some other Trump tariffs in place, including those on foreign steel, aluminum and autos, because those levies were imposed based on a different legal rationale and came after investigations by government agencies.
The Constitution gives Congress the power to set taxes, including tariffs. But over the years lawmakers have gradually let presidents assume significant power over tariffs imposed on imported goods.
Trump on April 2, dubbing it “Liberation Day,” imposed so-called reciprocal tariffs of up to 50% on countries with which the United States runs a trade deficit and 10% baseline tariffs on almost everybody else.
Claiming extraordinary power to act without congressional approval, he justified the taxes under IEEPA by declaring the United States’ longstanding trade deficits “a national emergency.”
He later paused some of the tariffs for 90 days, although he left the 10% tariffs in place in a confusing on-again, off-again trade war.
Traders say markets believe Trump will eventually back down altogether and they even created a hashtag #TACO, or Trump Always Chickens Out, to explain why markets have bounced back.
