Thursday morning saw a boost in investor confidence across major U.S. index markets after a significant legal ruling blocked a series of tariffs proposed by former President Donald Trump.
The U.S. Court of International Trade ruled late Wednesday that Trump had overstepped his legal authority under the International Emergency Economic Powers Act of 1977. In a unanimous decision by a three-judge panel, the court determined that Congress had not granted the president “unbounded” authority to impose sweeping tariffs under the guise of emergency declarations.
The ruling specifically struck down Trump’s proposed “Liberation Day” tariffs set to take effect April 2, as well as fentanyl-related tariffs on imports from Canada, Mexico, and China. In delivering a summary judgment, the court also pushed back on the administration’s attempt to use emergency declarations as a blanket justification for imposing broad economic restrictions.
Markets responded positively to the decision, interpreting it as a reduction in trade uncertainty and a check on unilateral trade actions. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all opened higher Thursday, buoyed by the prospect of more stable international trade relations and reduced risk of retaliatory tariffs.
Although the Trump administration has stated it will appeal the ruling in federal court, the immediate impact on investor sentiment was clearly positive. Still, some tariffs — particularly industry-specific ones on autos, steel, and aluminum — remain in place under the authority of Section 232 of the Trade Expansion Act.
Analysts suggest the decision may serve as a precedent for future limits on executive power in trade policy, a development that could reshape how administrations approach economic emergencies going forward.
