Introduction: Trump tariffs blocked by US court in New York
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A federal court in the US has blocked Donald Trump from imposing sweeping trade tariffs under an emergency powers law.
A three-judge panel at the court of international trade argued that Trump has exceeded his authority, left US trade policy dependent on his whims and unleashed economic chaos.
The court wrote:
The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.
…The court does not pass upon the wisdom or likely effectiveness of the president’s use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it.
There are reports that the Trump administration has filed a notice of appeal. White House officials have already publicly challenged the court’s authority n the case. A White House spokesperson told Reuters that it was “not for elected judges to decide how to properly address a national emergency”.
News that Trump’s tariffs may be unlawful was welcomed by stock markets in Asia. In Japan the Nikkei 225 index rallied by 1.9%, while in China the SSE Composite rose by 0.8% and Hong Kong’s Hang Seng rose by 1.1%. The South Korean Kospi index rallied by 1.8%.
In the UK, the blue chip FTSE 100 index is also poised to rise when markets open at 8am, with futures up 0.82%.
The agenda
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9:30AM BST: ONS estimates of inflation for different household types
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1:30PM BST: Second reading of US GDP
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1:30PM BST: US weekly jobless claims
Key events
Closer to home, there are some new figures today on the rate of inflation experienced by British households.
Overall UK household costs rose by 2.6% in the year to March, according to the Office for National Statistics. That marks a deceleration from 2.9% in the year to December 2024.
Private renters experienced the biggest rise in costs, with these households experiencing the highest annual inflation rate of 3.6% in March. Meanwhile households who owned their homes experienced an inflation rate of 1.8%, and those with a mortgage had a rate of 2.8%.
Phillip Inman
The White House is also under pressure from rising interest rates on US debt. Last week the lower house in Congress passed a tax bill funded largely by extra borrowings. It is estimated the giveaways will add $5tn to US debt levels.
Olivier Blanchard, an economics professor at the Massachussetts Institute of Technology and a former chief economist at the International Monetary Fund, said the tax bill had spooked investors, and especially those that wanted to buy bonds that last 10 or 30 years, concerned that they might not get their money back.
“If I were an investor, i would worry about buying a thirty year maturity treasury [bond], because god knows what’s going to happen,” he told Bloomberg News.
“I would buy a one year [bond] because there’s not much risk. I mean, even if I think that the [tax] policy is crazy, I’m going to get my money back after one year. But if I buy a 10 year, I start saying, yeah, things could happen.
“So, the utter fiscal irresponsibility of this administration is clearly what explains higher rates.”
Nvidia results push European tech stocks higher
Another bumper set of quarterly results from Nvidia has rippled over to the European stock markets too. Shares in the Dutch semiconductor equipment maker ASML have risen by 2.4% today, and the Stoxx Europe tech index has risen by 0.8%.
Over in the US, futures for the tech-heavy Nasdaq were up by as much as 2%, and shares in Nvidia itself are up 6% in pre-market trading.
Shares in Tesla, another leader in artificial intelligence technology, are also up 2.6%. Last night its chief executive Elon Musk announced he will leave his role in the Trump administration.
The chief executive of Hargreaves Lansdown, Dan Olley, is leaving the investment broker after less than two years in the top job.
Richard Flint, an independent non-executive director, will act as chief executive on an interim basis, subject to approval from the City regulator.
Olley will remain in post for a three-month handover period, and be available to the business for a further two months, Hargreaves said.
Last year the company agreed to a £5.4bn takeover by a consortium of private equity firms.
More scepticism arriving today as investors weigh whether the ruling from the trade court in New York will be enough to block Trump from pursuing his trade tariffs.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said:
In our view, tariffs are unlikely to disappear completely, as the administration could rebuild some of its tariff agenda through certain sections of the Trade Act of 1974. For investors, we continue to highlight volatility in the near term as more headlines emerge.
Meanwhile analysts Joachim Klement and Susana Cruz, of the broker Panmure Liberum, say the likelihood oof tariffs being cancelled has increased but is not their “base case”. They wrote:
Indeed, we expect that tariffs have been delayed, but not cancelled. Instead, the Trump administration will likely use other legal authorities like Section 301 of the Trade Act to impose similar tariffs, but with a slower and more deliberate approach.
This means that on the one hand, extreme tariffs and rapidly changing tariffs are less likely to happen going forward, which reduces uncertainty somewhat.
But in the short term, the court ruling, and the subsequent legal challenges will add significant uncertainty to the mix, making it even harder for US businesses to plan their capex and thus reduce US GDP growth due to a decline in investment activity.
UK seeks to accelerate US trade deal
Lisa O’Carroll
The UK has said it wants to accelerate negotiations to conclude a trade deal with Donald Trump in the wake of the US court ruling that the sweeping tariffs he imposed on imports from more than 60 countries were illegal.
Despite Keir Starmer sealing the first deal with Trump since his so-called “liberation day” at the start of April no legal text exists to bring the concessions he won into force.
The UK is also still threatened with a 10% reciprocal tariff on all exports outside the deal which was seen as a life saver for the car and steel industries.
The business secretary, Jonathan Reynolds, is expected to meet US commerce secretary Howard Lutnick at a meeting of the OECD in Paris next Tuesday.
A UK government spokesperson played down the US court ruling on Thursday plainly indicating it would continue to negotiate despite a technical opening to walk away from the deal.
“These are matters for the United States to determine domestically and we note this is only the first stage of legal proceedings.
“We were the first country to secure a deal with the US in a move to protect jobs across key sectors, from autos to steel, and we are working to ensure that businesses can benefit from the deal as quickly as possible,” the spokesperson said.
Trade experts have said the US court’s verdict just added more uncertainty to the global markets already heavily disrupted by the volatility of US trade policy.
“This court ruling doesn’t affect the tariffs that the UK negotiated down on cars and steel, but clearly adds another layer of complexity and uncertainty to what Trump is doing when businesses don’t know what tariffs their product would face in the US that can’t be good for the economy,” said David Henig, director of think tank European Centre for International Political Economy.
The EU is also in the middle of tense trade negotiations with Trump’s administration following last week’s threat to impose tariffs of 50% on all exports. It was already facing a 20% tariff on all exports as well as sectoral tariffs on autos and steel and aluminium, with both sides pausing measures and counter measures for 90 days until the beginning of July.
Its lead negotiator Maroš Šefčovič is also expected to meet with US commerce secretary Howard Lutnick in Paris next week at the OECD council meeting with EU sources saying a call between Donald Trump on Sunday with European Commission president Ursula von der Leyen unlocking a route to proper negotiations.
Also in the UK, some bleak figures from the car manufacturing industry, where production hit its lowest monthly output in more than 70 years.
Car and commercial vehicle production dropped 15.8% to 59,203 in April, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Monthly vehicle output has not been that low since 1952, excluding 2020 when the pandemic shut down most manufacturing.
The decline was because of a late Easter, SMMT said, as well as “model changeovers and lower demand in key export markets”.
The UK looks like it is losing out on the broader rally in Europe, with the FTSE 100 index down slightly by 0.1%.
The online car marketplace Auto Trader is at the bottom of the index, with shares down by 12%. It reported a 5% rise in revenue to £601m in the year ended in March, below analyst expectations of £606m.
Demand for used cars has been very strong, but that has been a problem for Auto Trader. Analysts at the broker Peel Hunt write:
The resilient car market has created headwinds for Auto Trader, as the
accelerated speed of vehicle sales on its platform weighs on ARPR [average revenue per retailer] growth.
Investors are watching the US dollar, which is currently up 0.1% against a basket of leading currencies and is one of the top performers in the G10 forex market today, says Kathleen Brooks, a research director at the broker XTB.
Sell the dollar was one of the biggest ‘tariff trades’, so now that tariffs are in jeopardy, an unwind of this position is to be expected.
However, for now, the focus is on a recovery in USD/JPY, and losses in the euro and the pound vs. the dollar have been minimal so far.
Rachel Reeves to push big pension funds to back British assets
Elsewhere, the UK government has said it will require the biggest pension funds in the country to invest in British assets.
It “will take a reserve power in the Pension Schemes Bill to set binding asset allocation targets” for investments in private makets, the Treasury said on Thursday. It will also secure £27.5bn for “local investment priorities” for Local Government Pension Scheme authorities.
The government also confirmed plans to pool multiple pension funds into bigger ‘megafunds’ which manage £25bn or more in assets. It aims to consolidate the 86 administering LGPS authorities into six pools.
The Labour government has been reviewing ways to overhaul the private pension system. In May, Reeves ruled out mandating that pension funds must allocate money to British assets, after 17 pension bosses signed up to a voluntary agreement to invest at least 5% of their assets in UK private markets.
Davos founder launches criminal complaint against accusers, according to a report from the Financial Times.
Klaus Schwab, the founder of the World Economic Forum, has reportedly launched a criminal complaint against the whistleblowers whose accusations led to his ousting.
Schwab founded the WEF in 1971 but stepped down in April after the board launched an investigation after whistleblowers reportedly accused him of manipulating research, using company funds to pay for private massages, and asking junior staff to withdraw thousands of dollars on his behalf.
The Financial Times reports this morning that Schwab said he would fight the “stupid and constructed” allegations, and that his lawyers had filed a complaint for defamation and coercion with the public prosecutor in Switzerland.
European markets rally after Trump tariff ruling
Stock markets across Europe are rallying this morning as investors wake up to news that a trade court in New York has blocked Trump’s “liberation day” tariffs.
The UK’s FTSE 100 blue chip index has ticked up 0.1%, while the German Dax rallied 0.9%. France’s CAC 40 has risen 1%.
Tariffs are dominating the headlines this morning but some of the market optimism has also come from Nvidia, which reported its first quarter results last night.
The chip designer, which has been at the heart of the AI spending boom, reported a 69% surge in revenue to $44.1bn in its quarter ended on 27 April, higher than expected.
The ompany has projected revenue of $45bn in the second quarter, meeting analyst forecasts even as it said that restriction on shipments of AI chips to China would cost it $8bn in sales.
Shares in Nvidia were up 4.9% in after-hours trading.
Tariffs on autos, steel and aluminium remain in place
The court in the US was not asked to address some industry-specific Trump has issued on cars, steel and aluminium under a different statute.
But analysts at Deutsche Bank think if the court ruling is upheld, Trump could pursue his other tariffs through the same means. They wrote:
If the ruling did remain in place, preventing the use of tariffs under IEEPA, one option for the administration would be to expand the use of other tariff instruments, like the Section 232 on national security grounds, which have been used for autos, steel and aluminium tariffs.
But this is clearly a setback for their tariff strategy, and it’s also going to complicate its current attempts to negotiate concessions from trading partners, given the possibility the tariffs might not come into force once the 90-day extension period is over.
Court ruling might not change final outcome for big US trading partners, says Goldman analyst
Even with the court action, Trump’s trade policies could still affect other big economies, analysts are warning.
Alec Phillips, an analyst at the investment bank Goldman Sachs, wrote:
This ruling represents a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major U.S. trading partners.
Trump has claimed authority to set trade tariffs under the International Emergency Economic Powers Act, or “IEEPA”. The law has historically been used to impose sanctions on enemies of the US or freeze their assets. Trump is the first US president to use it to impose tariffs.
But the Court of International Trade, which is in New York, has said the US Constitution gives Congress exclusive authority to regulate commerce with other countries, and that is not overridden by the president’s emergency powers.
Musk announces he will leave his role in Trump administration
It has been busy in the US overnight. Elon Musk has said he will leave his role in the Trump administration.
As my scheduled time as a Special Government Employee comes to an end, I would like to thank President @realDonaldTrump for the opportunity to reduce wasteful spending.
The @DOGE mission will only strengthen over time as it becomes a way of life throughout the government.
— Elon Musk (@elonmusk) May 29, 2025
The billionaire boss of Tesla has played a leading role at the department of government efficiency, or “DOGE”. His 130-day mandate as a special government employee in the Trump administration was set to expire about 30 May.
He had already been signalling his departure from Washington and a commitment to refocus on his businesses. He also criticised Trump’s new tax bill, calling it too expensive and a measure that would undermine his work to make the government more efficient.
Investors say stock markets will rally but ‘not the end of the tariff story’
Hopes that tariffs might be blocked has helped lift stocks in Asia, but there is likely to be much more uncertainty ahead, analysts say.
Prashant Newnaha, senior Asia-Pacific rates strategist, at TD Securities, said:
The knee-jerk reaction for equities to rally and bond yields to back up on the tariff pause makes sense.
However, with tariffs now in the appeal process and likely heading to the Supreme Court, uncertainty is back. Expect to see this lead to delays in investment and hiring. The pause also puts tariff revenue at risk which could bring deficit issues back on the radar.
Meanwhile Gary Ng, senior economist at Natixis, says:
The decision will fuel temporary risk-on sentiment in equities and lower bond yields as the market dials back inflation expectations driven by tariffs.
However, this is not the end of the tariff story. There is no clarity as the legal battle will continue and it does not change the fact that Trump will find ways to reshape global trade order.
Yunosuke Ikeda, head of macro research at Nomura, said:
At this point it’s almost impossible to know if the tariffs will be completely unwound by this. But in the hypothetical situation that they are, it’s natural to see dollar appreciation.
Basically Trump’s tariffs will lead to stagflation pressure on the U.S. economy, so reversing those tariffs would be a positive for the dollar.
Introduction: Trump tariffs blocked by US court in New York
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A federal court in the US has blocked Donald Trump from imposing sweeping trade tariffs under an emergency powers law.
A three-judge panel at the court of international trade argued that Trump has exceeded his authority, left US trade policy dependent on his whims and unleashed economic chaos.
The court wrote:
The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.
…The court does not pass upon the wisdom or likely effectiveness of the president’s use of tariffs as leverage. That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it.
There are reports that the Trump administration has filed a notice of appeal. White House officials have already publicly challenged the court’s authority n the case. A White House spokesperson told Reuters that it was “not for elected judges to decide how to properly address a national emergency”.
News that Trump’s tariffs may be unlawful was welcomed by stock markets in Asia. In Japan the Nikkei 225 index rallied by 1.9%, while in China the SSE Composite rose by 0.8% and Hong Kong’s Hang Seng rose by 1.1%. The South Korean Kospi index rallied by 1.8%.
In the UK, the blue chip FTSE 100 index is also poised to rise when markets open at 8am, with futures up 0.82%.
The agenda
-
9:30AM BST: ONS estimates of inflation for different household types
-
1:30PM BST: Second reading of US GDP
-
1:30PM BST: US weekly jobless claims
