Trump Tariffs Blocked by Federal Court: Impact on US Dollar and Stock Markets

In a surprising turn of events, a U.S. federal court has blocked President Donald Trump's proposed tariffs on imports, a decision that has sent ripples through financial markets. The ruling, issued on May 29, 2025, declared the tariff regime unlawful, citing overreach of executive authority by the Trump administration. This setback has sparked debates over trade policy and its broader economic implications.

The tariffs, dubbed 'Liberation Day' tariffs, were intended to impose significant duties on goods from major trade partners, including China, Canada, and Mexico. The court's decision to halt these measures has brought immediate relief to investors, as fears of escalating trade wars and rising import costs had previously weighed heavily on market sentiment.

Following the announcement, Wall Street reacted with cautious optimism. The S&P 500 and Nasdaq recorded modest gains, though the Dow Jones Industrial Average slipped into negative territory amid lingering uncertainty. Analysts suggest that while the ruling averts short-term economic pressure, the Trump administration's intent to appeal to the Supreme Court could prolong market volatility.

The US dollar weakened against safe-haven currencies as the tariff block reduced expectations of inflation driven by higher import prices. Economists warn that continued legal battles over trade policy may keep the currency under pressure, affecting international trade dynamics in the coming weeks.

Trump officials have criticized the ruling, accusing judges of brazenly abusing their powers. The White House is reportedly preparing to request an immediate pause from the Supreme Court, with some advisors suggesting alternative legal tools to implement tariffs even if the current block stands. This ongoing uncertainty has left businesses and investors on edge.

As the situation unfolds, global markets remain watchful of the potential for renewed trade tensions. The court's decision may offer temporary respite, but with the administration's determination to push forward, the future of U.S. trade policy hangs in the balance, promising further economic and political drama.