A U.S. trade court ruling that invalidated most of former President Donald Trump’s tariffs and deemed he had exceeded his legal authority brought a mix of relief and lingering uncertainty to global financial markets on Thursday.
The verdict, which complicates ongoing trade talks, drew restrained responses from key U.S. trading partners. Both Germany and the European Commission declined to comment, citing the ongoing legal process.
“We ask for your understanding that we cannot comment on legal proceedings in the U.S., as they are still ongoing,” stated a spokesperson from Germany’s economy ministry. “We continue to hope for a mutually beneficial resolution between the EU Commission and the U.S. government.”
Markets responded positively in some sectors. Technology firms, banks, luxury goods companies, and auto manufacturers — all of which had previously been hit by tariff-related disruptions — saw gains. The U.S. dollar also strengthened, rising 0.2% against the yen and 0.3% against the Swiss franc, as safe-haven assets weakened. Meanwhile, Wall Street index futures rose by over 1.5%.
The trade court’s decision represents a significant blow to Trump’s tariff-based approach to trade negotiations. Although the administration announced plans to appeal, analysts cautioned that investor sentiment may remain guarded until the legal process plays out.
After an adverse market reaction to Trump’s major tariff announcement on April 2, the administration paused most import duties for 90 days and aimed to pursue bilateral trade deals. However, aside from a recent agreement with the UK, new deals have been slow to materialize. Analysts suggest the court ruling may further deter countries like Japan from entering into agreements too hastily.
The court’s intervention could offer relief to critics of Trump’s tariffs and traders who thrive on market swings. “Assuming the appeal doesn’t succeed in the near term, the key benefit is time to prepare and a limitation on tariff scope — which currently cannot exceed 15%,” said George Lagarias, chief economist at Forvis Mazars.
Trade Turmoil
Trump’s trade war has disrupted industries ranging from luxury fashion and footwear to consumer appliances and automobiles. Companies have struggled with rising raw material costs, broken supply chains, and revised business strategies.
Major corporations such as Diageo, General Motors, and Ford have already withdrawn their annual forecasts. International firms like Honda, Campari, Roche, and Novartis are considering shifting or expanding operations in the U.S. to offset tariff impacts.
As markets processed this latest development, export-heavy European sectors, particularly autos and luxury goods, saw notable gains. The STOXX 600 index rose 0.4%, while France’s CAC 40 — weighted heavily toward luxury and banking stocks — climbed 0.8%.
Investor sentiment was further buoyed by strong earnings from Nvidia, an AI sector leader, reported late Wednesday.
Meanwhile, spot gold fell for a fourth consecutive day, and U.S. Treasury yields rose — a sign of investors pivoting away from safe-haven assets.
Still, analysts warned that the recent rally in stocks could be fleeting. “I think we’re in a period of heightened volatility — more market spikes are likely,” said Kevin Barker, global head of active equities at UBS Asset Management. “But volatility is the friend of the active investor.”
