Federal Court Blocks Trump’s Sweeping Tariffs
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What did the federal court rule about Trump's tariffs?
Shielding Chinese chipmakers from U.S. competition only strengthens them abroad and weakens America's position.
It's Thursday, May 29th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. A US federal trade court has ruled that President Trump didn't have the authority to impose global tariffs, a decision that voids the levies that have sparked a sweeping trade war and threatened to upend the world economy. The panel of judges from the Court of International Trade said the US trade deficit didn't fit the definition of an unusual and extraordinary threat, as defined in a 1977 law cited by Trump to underpin most of the tariffs, blocking what had been one of the administration's boldest assertions of executive power.
To put this ruling into context and look at how global markets are reacting, I'm joined by Deputy Finance Editor Quentin Webb. Quinton, lawyers for the Trump administration have come out and said they will appeal this decision. And a White House spokesman said that, quote, it is not for unelected judges to decide how to properly address a national emergency, end quote. And yet they have done that. Where does this ruling leave things?
How might this ruling affect U.S. trade policy?
Well, where this ruling leaves things is we already have this extraordinary level of uncertainty there. created by tariffs and the trade war. And if anything, that has just become even more complicated. So this could potentially end up in the Supreme Court. We don't know. We know that this is a Supreme Court that has generally been sympathetic to a slightly broader... interpretation of executive power, so potentially some of this could be reinstated. We also don't know whether the Trump administration could look to use other tools to work on the same tariffs. This decision effectively says that some of this is in the purview of Congress rather than the executive, but there are other methods that can be used for the executive to introduce tariffs.
And we also don't know exactly how this will affect all of these ongoing trade negotiations with counterparties like the European Union and China. One of the reasons that markets are rallying is that investors think this effectively gives others a bit more leverage in negotiations with the Trump administration, because why would you rush to do a deal that could disadvantage you when you know that potentially the tariffs won't hold at the end of the deadline that the Trump administration has imposed for talks.
What are the implications of the ruling for global markets?
So there's already this kind of like unpredictability, which people in the Trump administration say is part of the negotiation strategy, part of Trump's art of the deal. And then to that, you add this second layer of uncertainty, which is that there are other actors within the US system who The states, small business, the courts that are pushing in a different direction. So it becomes harder and harder to work out where we go from here.
And in terms of the market reaction we're seeing today, Quinton, you kind of alluded to that earlier, but it doesn't seem like we can say for sure that we are now in an all clear that the global trade war is fully off.
It seems like a kind of modestly positive reaction from markets, if you like. So stocks in Japan up, stocks in Europe broadly up, U.S. stock futures up, pointing to kind of higher open today. And of course, strong results from NVIDIA also probably feeding into stronger sentiment for the U.S. market. So on balance, you know, the global investor view is that this is good news.
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Chapters
5 chapters
1
What did the federal court rule about Trump's tariffs?
0:50–2:12
2
How might this ruling affect U.S. trade policy?
2:12–3:30
3
What are the implications of the ruling for global markets?
3:30–5:55
4
What is Elon Musk's latest announcement regarding his government role?
5:55–6:50
5
How is NVIDIA performing amidst U.S.-China trade tensions?
6:50–11:25
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