A UNITED States’ trade court ruling that blocked most of President Donald Trump’s tariffs and found he had overstepped his authority triggered some relief on financial markets on Thursday, while adding to the uncertainties weighing on the global economy.
Among the United States’ big trading partners, in the throes of negotiation with the Trump administration, Germany said it could not comment, as did the European Commission.
“We ask for your understanding that we cannot comment on the legal proceedings in the U.S., as they are still ongoing,” a spokesperson for Germany’s economy ministry said.
“We continue to hope that a mutually beneficial solution can be reached in the negotiations between the EU Commission and the U.S. government.”
The British government said the sweeping ruling was a domestic matter for the U.S. administration but noted that it was “only the first stage of legal proceedings”.
Winners on financial markets included chip makers, banks, luxury stocks and auto industry, all hit hard by tariff-led disruptions.
The U.S. dollar had earlier rallied against the yen and Swiss franc but its gains faded as the trade outlook remained uncertain and worries emerged about how Trump could respond.
Wall Street stock index futures had earlier risen by more than 1.5% but were last up just 0.8%.
The trade court ruling on Wednesday dealt a blow to Trump’s central policy of using tariffs to wring concessions from trading partners.
The decision affects the blanket tariff orders issued by Trump since January rooted in the International Emergency Economic Powers Act (IEEPA), a law meant to address threats during a national emergency. It does not cover sector-specific tariffs, such as those on steel, aluminium and car imports.
His administration immediately said it will appeal and analysts said investors will remain cautious as the White House explores its legal avenues.
If the court ruling holds, the president could deploy other trade laws to impose sector-specific levies as well as across-the-board and country-specific tariffs.
Item 1 of 2 A U.S. flag flutters near shipping containers as a ship is unloaded at the Port of Los Angeles, in San Pedro, California, U.S., May 1, 2025. REUTERS/Mike Blake/File Photo
Following a market revolt after his major tariff announcement on April 2, Trump paused most import duties for 90 days and said he would hammer out bilateral deals with trade partners.
But apart from a pact with Britain this month, agreements remain elusive and the court’s stay on the tariffs may dissuade countries like Japan from rushing into deals, analysts said.
Another pause in Trump’s stop-start trade policy could be helpful to opponents of his tariffs and to traders who relish volatility.
“Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs – which can’t exceed 15% for the time being,” George Lagarias, chief economist at Forvis Mazars international advisers, said.
Turmoil
Trump’s trade war has shaken makers of everything from luxury handbags and sneakers to household appliances and cars as the price of raw materials has risen, supply chains have been disrupted and company strategies redrafted.
Drinks company Diageo (DGE.L), opens new tab, automakers General Motors (GM.N), opens new tab and Ford (F.N), opens new tab are among those who have abandoned forecasts for the year ahead.
Non-U.S. companies including Honda (7267.T), opens new tab, Campari (CPRI.MI), opens new tab and pharmaceutical companies Roche (ROG.S), opens new tab and Novartis (NOVN.S), opens new tab have said they are considering moving operations or expanding their U.S. presence to mitigate the impact of tariffs.
As markets assessed the latest twist in the trade upheaval, European export-sensitive sectors, such as autos and luxury stocks, were among leading gainers on Thursday, although earlier gains faded through the morning.
The pan-continental STOXX 600 (.STOXX), opens new tab was up 0.2%, while France’s CAC 40 (.FCHI), opens new tab, which has a heavy weighting of luxury and bank stocks, rose 0.5%.
Overall sentiment was also lifted by strong results late on Wednesday from AI bellwether Nvidia (NVDA.O), opens new tab.
But the gains in shares may be short-lived, analysts said, with those who relish risk making the most of them.
“I think we are in a period of higher volatility – we will get some more spikes on the way, I think. But volatility is the friend of the active investors,” Kevin Barker, global head of active equities, UBS Asset Management, told a media briefing.
