A US trade court on Wednesday blocked US President Donald Trump’s reciprocal tariffs announced on April 2, citing that Trump exceeded his authority by attempting to impose blanket duties on imports to the US.
The Manhattan-based Court of International Trade said the Constitution grants Congress the power to regulate international commerce, which cannot be overruled by the President’s emergency authority to protect the economy.
On April 2, Trump imposed reciprocal tariffs on the US’s trading partners. However, just a week later, many of these country-specific tariffs were put on hold.
The court order against Trump’s tariffs had a positive effect on major global stock markets; Japan’s Nikkei and Korea’s Kospi surged 2 per cent. Indian stock market benchmark Sensex also jumped over 500 points but lost steam soon. Around 12:10 PM, the benchmark index traded 23 points lower at 81,289.
What does the blocking of Trump’s tariffs mean for the Indian stock market?
Experts say the blocking of Trump’s tariffs by the US federal court is positive news for markets.
“This court ruling is the second big blow to President Trump after the blow delivered by the bond market, which forced the Trump administration to pause the tariffs for 90 days. From the market perspective, this is a positive development,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Trump’s aggressive tariff policy has raised the risk of higher inflation and lower economic growth in the US. The US Federal Reserve in its last policy meeting flagged that inflation risk has risen due to tariffs, and the world’s largest economy was staring at an uncertain future.
The minutes of the US FOMC May policy meeting highlighted that Fed officials believe inflation will rise and the job market will weaken significantly this year.
Wednesday’s court order, however, has created some uncertainty about the ongoing trade talks with the US, which may weigh on market sentiment. In the context of India, it is even more complex since the country was actively engaged in talks with the Trump administration after the US had secured a temporary deal with China and delayed tariffs on the European Union.
(This is a developing story. Please check back for fresh updates.)
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
