A federal appeals court has temporarily blocked a ruling from the Court of International Trade, which had prohibited the majority of the Trump administration’s expansive tariffs on global trading partners. This legal twist has reignited uncertainty, leading to renewed sell-offs in US stock markets and a steep decline in the US dollar from its intraday high.
This decision affords the White House additional time to defend the legality of the president’s attempts to reshape international trade relations. Federal officials indicated that similar levels of import levies might be reinstated using alternative legal authorities. However, enacting tariffs under different sections of the Trade Act could take several months.
“I assure the American people that the Trump tariff agenda is alive, well, and will be implemented to protect you, safeguard your jobs and factories, and prevent the export of American wealth to foreign countries,” stated Peter Navarro, Trump’s top trade advisor, on Thursday.
Trump had invoked the International Emergency Economic Powers Act (IEEPA) to impose the so-called reciprocal tariffs announced in early April. However, on Wednesday, the trade court stated that the president does not possess the authority to impose such sweeping levies under the IEEPA.
“America cannot function if President Trump—or any president, for that matter—has sensitive diplomatic or trade negotiations disrupted by activist judges,” asserted White House Press Secretary Karoline Leavitt. “Ultimately, the Supreme Court must intervene to protect our Constitution and our nation.”
Wall Street Pulls Back from Early Gains
Initially, US stock markets surged following the original court ruling, alongside strong quarterly earnings from Nvidia. However, major indices surrendered early gains despite a positive close on Thursday. During the Asian trading session on Friday, US stock futures continued to decline amid a prevailing risk-off sentiment.
As of 4 a.m. CEST, Dow Jones Industrial Average futures were down 0.08%, and S&P 500 and Nasdaq 100 futures both fell 0.26%.
European markets are also set to open lower, according to futures pricing. The Euro Stoxx 50 dipped by 0.19%, while Germany’s DAX slipped by 0.15%. For the second consecutive day on Thursday, German equities extended losses following a record high earlier in the week. Investors will closely watch the developments in US-EU trade talks, although the ongoing legal battles surrounding the Trump administration’s tariffs add complexity to the situation.
Asian equity markets largely trended downward on Friday. Hong Kong’s Hang Seng Index dropped 1.4%, Japan’s Nikkei 225 fell 1.39%, and South Korea’s Kospi declined by 0.61%. Australia’s ASX 200 remained flat as of 3:10 a.m. CEST.
The US Dollar Declines Amidst Rising Haven Assets
The recent court ruling has again shaken investor confidence in US assets, particularly the dollar. Yields on US government bonds initially soared to 4.5% but later retreated to 4.42% as Treasury prices faced renewed pressure.
In contrast, haven assets have rallied. Gold experienced a surge, while the euro, Swiss franc, and Japanese yen all saw significant strengthening. The euro notably rebounded sharply from an intraday low against the dollar following the pause in the tariff ruling. The EUR/USD pair reached as low as 1.1210 before climbing to 1.1353 by 3:11 a.m. CEST. Gold futures also gained momentum, increasing to $3,321 per ounce from an intraday low of $3,269 on Thursday.
Photo credit & article inspired by: Euronews
