A U.S. trade court’s ruling on Wednesday, which struck down President Donald Trump’s broad tariffs as an overreach of authority under the 1977 International Emergency Economic Powers Act, continues to reverberate through global markets and trade negotiations.
While the decision — previously reported as a significant blow to Trump’s trade agenda — has sparked a rally in equities and the U.S. dollar, it has also intensified uncertainty for businesses and policymakers navigating an already volatile economic landscape.
Financial markets extended gains on Thursday, with Wall Street stock futures climbing over 1.5% and export-driven sectors like autos, luxury goods, and chip makers leading the charge.
Asian markets, including South Korea’s Kospi and Japan’s Nikkei, have risen more than 7% since Trump’s April 2 tariff announcement, while European bourses also saw gains.
The U.S. dollar strengthened, up 0.2% against the yen and 0.3% against the Swiss franc.
However, analysts caution that the optimism may be fleeting.
“Trump may still have scope to appeal or impose narrower, sector-specific tariffs, so policy uncertainty lingers,” said Charu Chanana, chief investment strategist at Saxo in Singapore.
The court’s ruling, now under appeal by the Trump administration, has left businesses grappling with indecision.
“My big worry is that companies start to put off things like hiring or capital expense or giving people raises for these factories or manufacturing,” said David Chao, global market strategist for Asia Pacific at Invesco.
“And that could certainly put a dampener then on company earnings and consumption could also be impacted by that.”
The stop-start nature of Trump’s trade policy, including a 90-day tariff pause after the April 2 announcement, has already disrupted long-term planning.
“This stop and go is not helpful for businesses that need to make decisions that can take several years, even a decade, to implement,” said Kei Okamura, a portfolio manager for Neuberger Berman in Tokyo.
Trump’s promise of bilateral trade deals has yielded only a pact with Britain, with countries like Japan appearing less eager to negotiate amid the legal uncertainty.
Germany and the European Commission declined to comment on the ongoing U.S. legal proceedings.
“We ask for your understanding that we cannot comment on the legal proceedings in the U.S., as they are still ongoing,” a spokesperson for Germany’s economy ministry said.
The court’s decision may further stall negotiations, as trading partners await clarity on the administration’s authority.
While the ruling offers a “marginal positive” for market sentiment, volatility remains a hallmark of this trade environment.
“Trade and portfolio strategies have shifted toward shorter investment horizons,” said Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at Aberdeen Investments.
As the case heads to the U.S. Court of Appeals for the Federal Circuit, businesses and investors face a prolonged period of uncertainty, with the potential for further market swings.