Trump tariff push given new twist by court setback
By Samuel Indyk and Sarah Marsh
(Reuters) -A U.S. 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."
Winners on financial markets included chip makers, banks, luxury stocks and auto industry, all hit hard by tariff-led disruptions.
The U.S. dollar rallied 0.2% against the yen and 0.3% against the Swiss franc as currencies and assets that have benefited from the tariff-induced market turmoil fell. [MKTS/GLOB]
Wall Street stock index futures rose by more than 1.5%.
The trade court ruling on Wednesday dealt a blow to Trump's central policy of using tariffs to wring concessions from trading partners.
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.
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, automakers General Motors and Ford are among those who have abandoned forecasts for the year ahead.
Non-U.S. companies including Honda, Campari and pharmaceutical companies Roche and Novartis 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.
The pan-continental STOXX 600 was up 0.4%, while France's CAC 40, which has a heavy weighting of luxury and bank stocks, rose 0.8%. Overall sentiment was also lifted by strong results late on Wednesday from AI bellwether Nvidia.
Spot gold declined for a fourth straight day, while U.S. Treasury yields rose. Bond yields move inversely with prices.
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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
11 minutes ago
- Yahoo
UK needs tough action on government budget policy, OECD warns
LONDON (Reuters) -Britain's government needs to try harder to reduce borrowing and debt, the Paris-based Organisation for Economic Cooperation and Development said on Tuesday, just over a week before finance minister Rachel Reeves sets out long-term spending plans. "Fiscal prudence is required as the monetary stance is easing gradually," the OECD said in a section on Britain in a broader assessment of international economies. "Efforts to rebuild buffers should be stepped up in the face of strongly constrained budgetary policy and substantial downward risks to growth, while productivity-enhancing public investments should be preserved," it added. Reeves has said she is committed to self-imposed fiscal rules which include balancing tax revenues and day-to-day spending by the 2029-30 financial year and lowering government financial liabilities as a share of the economy. The OECD forecast that Britain's economy will grow 1.3% this year before slowing to growth of 1.0% in 2026 due to trade tensions and higher business uncertainty. "The state of the public finances is a significant downside risk to the outlook if the fiscal rules are to be met," the OECD said. "Currently very thin fiscal buffers could be insufficient to provide adequate support without breaching the fiscal rules in the event of renewed adverse shocks." At the last set of official forecasts in March, Reeves had 10 billion pounds of headroom to meet her fiscal rules - a narrow margin by historic standards that could easily be eroded by higher borrowing costs or weaker growth. The OECD said Reeves should make targeted spending cuts, close tax loopholes and raise local property taxes as well as change the benefits system to get more claimants into work. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15 minutes ago
- Yahoo
Hundreds of NYC students walk out of school to protest Trump after ICE arrests 20-year-old Venezuelan classmate
About 500 Big Apple students staged a walkout Tuesday after federal immigration agents detained a 20-year-old Venezuelan migrant who had been attending a Bronx high school. US Immigration and Customs Enforcement arrested an Ellis Prep Academy student identified only as Dylan on May 21 when he showed up for a mandatory immigration court hearing, reported. 'It seems like a dirty game on their part,' Raiza, Dylan's mother, told Chalkbeat. 'When someone appears in front of a judge, it's because they don't have any criminal record, they want to do the right thing,' she told the outlet. 'The only thing he wants is to study.' Dylan had graduated high school in Venezuela but was looking to improve his English and prepare for college at the academy, which is a school for English language learners and older students, the outlet said. He had been living with his mother and two younger siblings, who also fled Venezuela, the report said. More than 500 students skipped school at around noon Thursday to attend an anti-Trump protest in Union Square park, blasting the president for his hard-line immigration and border policies. 'A lot of my friends from my school are not citizens or even permanent citizens of the United States and I want to protect them, said Shera Zhou, 18, a senior at Stuyvesant High School. 'I want their voices to be heard even though they can't be here. 'I really think everyone should have the right to stay in the United States because we are a country built on immigrants.' Nava Litt, a Bronx High School of Science senior, said the Trump administration was taking actions that were 'undemocratic,' threatening free speech rights and education. 'We can't just sit by and let that happen,' Litt, 18, said. 'Something that we think is a big concern right now is that students are being detained by ICE for exercising their free speech rights.' Dylan had turned himself in at the US border in April 2024, applying for asylum through the temporary protected status program initiated by the Biden Administration. The Trump administration has since scrapped that program after President Trump campaigned on cracking down on illegal immigration. The courts have blocked or ruled against some deportations that are enforced without adequate notice or due process but the repeal of temporary protected status remains in effect. Chancellor Aviles-Ramos has also called out the detention. 'New York City Public Schools stands firmly with our students, including our immigrant students, and our schools will always be safe spaces for them,' the chancellor said in a statement. 'Our hearts go out to the student who was detained by ICE, and we are deeply saddened for their family. While this incident did not occur on school grounds, we want to reassure our families: we will continue to speak out and advocate for the safety, dignity, and rights of all of our students.' Aviles-Ramos said the city public school system will support 'every child and family — regardless of immigration status' and 'we encourage families to continue to send their children to school.' Mayor Eric Adams sidestepped the controversy during an unrelated news conference Tuesday, declining to question or criticize the student's detention. 'I want to be extremely clear. That did not happen in a school,' Adams said. 'We do not coordinate with ICE on civil detainers. I think that is a question for federal authorities.' ICE had no immediate comment.
Yahoo
15 minutes ago
- Yahoo
Democratic attorneys general outline response to federal government during Seattle town hall
Jun. 2—Just over four months into President Donald Trump's second administration, the rate and frequency with which Democratic attorneys general have challenged federal policy has greatly outpaced that of his first term in office. In the past 19 weeks, Washington Attorney General Nick Brown has filed 20 lawsuits against the federal government and indicated more are likely to follow soon. According to Brown, Washington had filed two lawsuits at a similar point in Trump's first term. The lawsuits have frequently been brought by multistate coalitions, with California Attorney General Rob Bonta and Oregon Attorney General Dan Rayfield each joining Washington in more than a dozen of the cases. Ahead of a town hall event Monday, the three attorneys general said the actions are part of a coordinated effort. "A very increased type of action being brought by the states," Brown said during a news conference Monday evening. "That is reflective of one, being extremely prepared for this moment, two, the collaboration amongst the states, and three, a level of lawlessness and recklessness by the Trump administration that was not there the first time. And we as attorneys general need to respond." The Community Impact Town Hall on Monday offered a forum for community members to voice their concerns over the loss of funding or other cuts to federal programs and ask about their state's response to the Trump administration. Audience questions included how states could ensure funds for medical research are properly distributed and what steps the states have taken to restrict local law enforcement from enforcing immigration law. Like Washington, both Oregon and California have long had state laws that limit the amount of information local authorities can provide immigration officials. California's law, Bonta said, was challenged during the first Trump administration, with the state successfully arguing "it was an unlawful violation of the tenth amendment for the Trump administration to try and conscript or commandeer our resources for our local law enforcement to be used for immigration enforcement." In recent months, the Keep Washington Working Act has frequently drawn ire from Republican lawmakers and prompted a Congressional investigation. The 2019 law restricts local law enforcement from using local resources to help federal officials enforce immigration law and prevents local law enforcement from sharing nonpublic information with federal officials, except in certain scenarios. Last month, the three states filed lawsuits against the Department of Homeland Security and the Department of Transportation, alleging that both agencies had recently sought to stipulate that a state must cooperate with federal immigration officials to receive federal funding. "When they try to take the funding away to compel action, we will stand in place to protect our sanctuary state laws that exist up and down the West Coast," Rayfield said. "I feel very fortunate, again, to be on the West Coast." It appears that more lawsuits challenging federal immigration efforts could come in the near future. Late last week, the Department of Homeland Security published a list of "sanctuary jurisdictions" that it claimed do not fully cooperate with federal immigration law. Trump, who ordered the publication of the list, has said those on the list risk the loss of federal funds. According to the list, qualification for the list was "determined by factors like compliance with federal law enforcement, information restrictions, and legal protections for illegal aliens." The list, however, received immediate pushback from some of those who appeared on it. On Saturday, Kieran Donahue, president of the National Sheriffs' Association, said in a statement that the list "was created without any input, criteria of compliance, or a mechanism for how to object to the designation. Sheriffs nationwide have no way to know what they must do or not do to avoid this arbitrary label." "This decision by DHS could create a vacuum of trust that may take years to overcome," Donahue said, adding the list should be taken down "immediately." While the list was taken down Sunday, an archived version shows that Washington, along with 35 counties and five cities within the state, were among the more than 500 jurisdictions it mentioned. Both California and Oregon also appeared on the list. On Monday, Brown called the list "laughable" and said it "really adds to the fact that this is arbitrary and capricious action by the Trump administration." "We as attorneys general have to take those threats seriously and reaffirm state sovereignty," Brown said. "Each of our states has adopted different policies over how local and state officials can cooperate with federal immigration enforcement officials. We do that to keep the public safe and make sure that people who are the victims of crime can cooperate fairly and freely with law enforcement without fear of immigration enforcement actions against them."
