Asian markets climbed and U.S. stock futures rose sharply following a federal court decision blocking former President Donald Trump from imposing broad tariffs under emergency economic powers.
A three-judge panel ruled that the 1977 International Emergency Economic Powers Act (IEEPA) does not authorize the sweeping tariffs Trump enacted, supporting multiple lawsuits claiming he exceeded his authority. This decision throws into question key aspects of Trump’s trade policies, which have rattled global markets, strained international relations, and clouded the outlook for inflation and the global economy.
The Trump administration has filed an appeal, and it remains unclear whether it will suspend the disputed tariffs in the meantime. Many of the tariffs, some reaching double digits, had already been paused for up to 90 days to facilitate trade negotiations, but uncertainty about their future has continued to weigh on businesses and consumers.
Stephen Innes of SPI Asset Management commented, “Just when traders thought they’d seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific,” calling the ruling “a brief respite before the next thunderclap.”
Following the court’s decision, U.S. futures rallied. Futures for the S&P 500 rose 1.6%, while those for the Dow Jones Industrial Average gained 1.2%.
In Asia, Japan’s Nikkei 225 surged 1.5% to 38,263.36. Japan, a key U.S. ally, has repeatedly urged the White House to lift tariffs on its steel, aluminum, autos, and other exports. The court ruling also boosted the U.S. dollar, which jumped against the yen, trading at 146.06 yen early Thursday compared to 144.87 yen late Wednesday.
Australia’s S&P/ASX 200 edged up 0.3% to 8,418.90. In South Korea, the Kospi climbed 1.4% to 2,707.77, buoyed not only by the U.S. court ruling but also by a surprise rate cut from the Bank of Korea, which lowered its benchmark interest rate to 2.5% from 2.75% to stimulate economic activity.
On Wednesday, prior to the court decision, U.S. stocks closed lower. The S&P 500 dropped 0.6% to 5,888.55, though it remains within 4.2% of its record high after rebounding from the lows sparked by trade war fears last month. The Dow fell 0.6% to 42,098.70, and the Nasdaq slipped 0.5% to 19,100.94.
Investor attention had also been focused on corporate earnings, particularly Nvidia’s latest quarterly report, released after market close. The AI sector leader saw its stock dip 0.5% during regular trading but jumped 4.9% in after-hours trading.
Retailers also had a mixed day. Macy’s reported smaller-than-expected declines in revenue and profit but still ended 0.3% lower. Meanwhile, Abercrombie & Fitch soared 14.7% after beating earnings expectations. CEO Fran Horowitz attributed the strong performance to global growth and resilience in the Hollister brand, which helped offset softness in the Abercrombie line.
