Markets Climb Following Ambiguous Decisions on Trump's Tariff Policies
Stocks ended the trading day higher on Thursday after a federal appeals court temporarily reinstated President Donald Trump's tariffs on key trading partners, including China. However, the ultimate fate of the policy remains uncertain, as the court granted an extension to consider the case.
The Dow Jones Industrial Average closed with a gain of 117 points, or 0.2%, while the S&P 500 increased 0.4%, and the tech-heavy Nasdaq climbed 0.3%.
Earlier in the day, a lower court had invalidated the tariffs, dealing a significant blow to Trump's tariff policy. The ruling, issued late Wednesday by the U.S. Court of International Trade, declared that the president's use of the International Economic Emergency Powers Act (IEEPA) as justification for the tariffs was unlawful.
However, the appeals court intervention revived the tariffs on Thursday afternoon. The Trump administration has appealed the lower court's decision and is expected to continue the legal fight through the U.S. Court of Appeals for the Federal Circuit and potentially the Supreme Court.
The dispute centers on Trump's invocation of the IEEPA, a 1977 law that allows the president to halt transactions with a foreign adversary that poses a threat. While the law permits sanctions and trade embargoes, it does not explicitly grant the power to impose tariffs. The lower court's ruling afforded the Trump administration up to 10 days to halt the tariffs.
One of the tariffs affected by the court ruling is the set focused on Mexico and Canada over their alleged involvement in the fentanyl trade. The court's decision would also invalidate a 10% tariff on goods from nearly all countries.
Before the court's decision, Trump had scaled back some of the tariffs at issue. For instance, a trade agreement reached between the U.S. and China earlier this month saw both countries agreeing to decrease tit-for-tat tariffs, triggering a surge in the stock market. Within days, Wall Street firms revised their forecasts of a recession.
The ruling did not impact sector-specific tariffs, such as those on autos, steel, and aluminum. Tariff actions on other countries have also been delayed or suspended, pending further developments.
The U.S. Court of International Trade's ruling in May 2025 found that Trump had exceeded his authority by using the IEEPA to justify sweeping tariffs as a national emergency. The ruling blocked the tariffs imposed last month on almost all U.S. trading partners, as well as earlier levies on China, Mexico, and Canada, on the grounds that Trump lacked the legal basis to act without congressional approval.
This marks a complex and evolving trade policy landscape, with ongoing appeals and diplomatic negotiations shaping the tariff landscape in the coming weeks and months.
- The decision by the U.S. Court of International Trade in May 2025 challenges the legality of President Trump's use of the International Economic Emergency Powers Act (IEEPA) to justify broad tariffs, potentially impacting trade relationships with key nations.
- International politics, specifically the legality of certain tariffs, influence the world of finance, as seen in the stock market's response to the ongoing court battles and trade agreements.
- The tech-heavy Nasdaq, along with the S&P 500 and the Dow Jones Industrial Average, experienced gains on Thursday, likely due to the reinstatement of President Trump's tariffs on key trading partners, including China, affecting global business and finance.
- The evolving tariff landscape, shaped by legal appeals and diplomatic negotiations, impacts various sectors and international businesses, such as the fentanyl trade among Mexico, Canada, and the United States, as well as the 10% tariff on goods from nearly all countries.
