MARKETS REACT: Markets Hope Trump Tariffs Stay ‘Unlawful’

Who knew the three judges at the rather obscure United States Court of International Trade had the power to spark a rally in global stock markets and shove the dollar higher against its safe-haven peers?

Early in the Asian trading day, news broke the court had declared President Donald Trump’s April 2 tariffs to be “invalid as contrary to law”, sending risk assets surging.

And this wasn’t a narrow judgment. All three judges – one appointed by Trump, one by Obama and one by Reagan – agreed Trump had overstepped his authority by declaring an emergency to slap tariffs on the rest of the world.

It’s worth a read if you have the time.

The White House quickly said it would appeal to the U.S. Court of Appeals for the Federal Circuit in Washington, and will surely go to the Supreme Court if needed.

Higher courts are usually reluctant to overturn unanimous rulings like this one, so this could be an extended process. In the meantime, the tariffs are up in the air and any country negotiating with the White House on trade will be tempted to stall. The chance of quick “beautiful deals” is out the window.

With Trump’s ability to arbitrarily declare emergencies in doubt, investors are hoping policy-making will be a little less chaotic. S&P 500 futures jumped 1.6% while Nasdaq futures are up around 2%, having already got a boost from Nvidia earnings guidance that lifted its shares 4.4% after the bell.

Most Asian markets and European stock futures are up 1% or more, while the dollar gained on the Swiss franc, euro and yen.

Treasury yields are up just a little, and Fed fund futures have only slightly pared back expectations for rate cuts, given a lasting block of the April 2 tariffs has mixed implications.

On the one hand it would brighten the economic outlook and greatly lessen the risk of recession, but it would also mute the coming inflationary pulse. And it was inflation that was very much on the minds of Fed officials in their last meeting.

Oh, and in secondary news it seems Elon Musk is no longer on the government payroll.

(By Wayne Cole; Editing by Edmund Klamann)