Stocks Rally as Court Nixes Trump’s Tariffs—But Legal Fight Is Far from Over

The Trump tariffs were nullified by the courts, but the administration is appealing the ruling.

A panel of judges from the U.S. Court of International Trade struck down President Donald Trump’s tariffs, effectively wiping out all of the reciprocal tariffs, the fentanyl and border security tariffs, the tariffs on China, and 10% universal tariffs that Trump placed on trading partners.

Stocks were moving higher after the opening bell, with the Dow Jones up about 100 points, the S&P 500 rising 50 points, and the increasing about 200 points.

The three judges on the panel ruled that Trump exceeded his authority in unilaterally imposing tariffs without the approval of Congress. Trump had cited the 1977 International Emergency Economic Powers Act (IAEE) as the reason for imposing tariffs without Congressional approval, but the judges said this did not qualify as an economic emergency.

“The court holds for the foregoing reasons that IEEPA does not authorize any of the Worldwide, Retaliatory, or Trafficking Tariff Orders. The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs. The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders. This conclusion entitles Plaintiffs to judgment as a matter of law; as the court further finds no genuine dispute as to any material fact, summary judgment will enter against the United States. See USCIT R. 56. The challenged Tariff Orders will be vacated and their operation permanently enjoined,” the judges said in their ruling.

The suit was brought by 12 states, led by Oregon and Arizona, and five small businesses.

“President Trump’s sweeping tariffs were unlawful, reckless, and economically devastating. They triggered retaliatory measures, inflated prices on essential goods, and placed an unfair burden on American families, small businesses and manufacturers,” Oregon Attorney General Dan Rayfield said. “We brought this case because the Constitution doesn’t give any president unchecked authority to upend the economy. This ruling reaffirms that our laws matter, and that trade decisions can’t be made on the president’s whim.”

So, What Does This Mean?

The ban on tariffs go into effect immediately, meaning they are not enforceable. However, the Trump Administration has already appealed the decision.

“It is not for unelected judges to decide how to properly address a national emergency,” White House spokesman Kush Desai said, reported NPR. “President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.”

Legal experts expect this case to ultimately make its way to the Supreme Court for a final determination.

This may be just the beginning of protracted legal wrangling over tariffs, as multiple lawsuits have been filed. Some attorneys are even planning to file suits on behalf of U.S. companies that had to pay the unlawful tariffs.

According to Barron’s, some $14 billion in tariffs were collected from U.S. companies in April.

In the meantime, economists at Goldman Sachs suggested that Trump could put in place some tactics to keep some tariffs in place legally, at least temporarily.

“This ruling represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners,” Goldman Sachs economists wrote in a research note, reported CNBC. “For now, we expect the Trump administration will find other ways to impose tariffs.”

Among them, Goldman Sachs said Trump could impose temporary tariffs before requiring a vote of Congress.

While the stock markets jumped after the ruling was announced, the gains declined as the market opened Thursday, mainly due to the uncertainty of it all and investors likely waiting for yet another shoe to drop.

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