US Stock Futures Up After Federal Court Strikes Down Trump’s Tariffs

Topline

U.S. stock futures surged in early trading on Thursday after a federal trade court struck down President Donald Trump’s sweeping “Liberation Day” tariffs and declared the president exceeded his authority by imposing them.

President Donald Trump during his “Liberation Day” trade announcement event at the White House on … More April 2, 2025 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)

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Key Facts

A three-judge panel at the Court of International Trade ruled Trump’s tariffs imposed on April 2 should be “set aside,” siding with business groups and Democratic-led states that asked the court to strike the tariffs down as unlawful.

The judges agreed with plaintiffs’ claims that Trump doesn’t have authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which gives presidents the power to impose some sanctions during national emergencies.

IEEPA does not explicitly mention anything about tariffs, which plaintiffs argued means that Trump doesn’t have authority to impose them under the law, and the trade court agreed, writing, “Any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional.”

The ruling halts Trump’s tariffs on nearly every country – minus the tariffs on Mexico, China and Canada that were imposed prior to April 2 – but the White House is likely to appeal the decision, and either an appeals court or the Supreme Court could quickly put the tariffs back in effect.

How Have Markets Reacted To The Trade Court Ruling?

U.S. stock futures surged in early trading on Thursday, with the benchmark S&P 500 Futures rising 1.5% to 5,991.50 points, while Dow Futures climbed to 42,630.00 points—up 1.1% since Wednesday’s close. The tech-centric Nasdaq Futures had the biggest bump as it rose 1.9% to 21,785.25 points. Key Asian markets responded positively to the court ruling, with China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index rising 0.7% and 1.35% respectively. Japan’s Nikkei 225 index and South Korea’s KOSPI index both surged by nearly 1.9%.

How Has The White House Reacted To The Ruling?

The president has not directly commented on the ruling yet, but White House spokesperson Kush Desai told various outlets that trade deficits amount to a national emergency “that has decimated American communities, left our workers behind, and weakened our defense industrial base — facts that the court did not dispute.” He then criticized the ruling saying: “It is not for unelected judges to decide how to properly address a national emergency,” and the administration is prepared to use “every lever of executive power to address this crisis and restore American Greatness.”

Crucial Quote

Trump’s executive orders covering his “Liberation Day” tariffs “exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs,” the three-judge panel wrote in their ruling.

What To Watch For

Trump is all but certain to appeal the court’s ruling to the US Court of Appeals for the Federal Circuit. That court could put the tariffs back into effect, as Bloomberg noted in April that court has historically been deferential to presidents when it comes to tariffs. It’s likely the dispute will ultimately be decided by the Supreme Court, though it’s unclear how and when justices could rule on the issue. Trump could also try to impose his tariffs though other laws, but legal experts told Forbes prior to Wednesday’s ruling that other laws would require Trump to go through a lengthier process to impose any tariffs.

Key Background

Last month, at a White House event he deemed “Liberation Day,” the president announced a series of sweeping levies that he described as “reciprocal tariffs” against nearly every country, ranging from 10% to 50%. Trump argued that these tariffs were a result of the U.S.’s trade deficits with each of these countries and the purported barriers they have placed on American goods. A few days after the announcement majorly shook the stock and bond market, the president made his first of many backpedals on the matter by pausing the tariffs on every country for 90 days except China, which announced retaliatory measures, while maintaining a baseline rate of 10%. A few days later, the administration announced that some key electronic items, including smartphones and computers, would be excluded from the tariffs. While tariffs on most other nations remained paused, Washington and Beijing engaged in an escalatory tit-for-tat tariff battle, which saw a 145% tariff rate on Chinese goods entering the U.S. and China hit U.S. goods with a 125% levy. After talks in Geneva earlier this month, both countries agreed to roll back most new tariffs on each other for 90 days to allow for negotiations.