The U.S. dollar saw a sharp rebound this Thursday following a court ruling that blocked former President Trump’s proposed “Liberation Day” tariffs. The decision, issued unanimously by three judges at the Manhattan-based Court of International Trade, has injected fresh uncertainty into the direction of future U.S. trade policy.
At the center of the ruling is a constitutional check on presidential powers. The court found that authority over trade policy lies with Congress, and cannot be exercised unilaterally by the President—even under the guise of an “economic emergency.” Importantly, the judges emphasized that their decision was not an evaluation of the merits of the tariffs themselves, but rather a legal necessity within the current constitutional framework.
Markets reacted swiftly to the news. Investor sentiment improved, sending U.S. equity futures higher and boosting the dollar:
– USD rose 0.6% against the yen to 145.72
– Up 0.65% versus the Swiss franc to 0.8326
– Euro fell 0.5% against the dollar to 1.1232
– British pound dipped 0.2% to 1.3432
The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, climbed back above 100 for the first time in weeks, closing at 100.40.
The court case stemmed from two lawsuits—one led by the nonprofit Center for Free Justice on behalf of five small businesses affected by tariffs, and another filed by 13 state attorneys general. Plaintiffs included a New York-based wine and spirits importer and a Virginia company supplying educational materials and musical instruments. Their concern: the tariffs threatened to erode already-tight margins and risked undermining their core operations.
Oregon Attorney General Dan Rayfield, a lead figure in the case, underscored the broader significance of the ruling: “The tariff policy wasn’t just legally flawed—it was reckless. This decision reaffirms the strength of our constitutional system and sends a clear message: trade policy cannot be dictated by presidential impulse.”
The Trump administration has indicated plans to appeal. Defending the tariff initiative, Trump had argued it was an effort to revive American manufacturing. However, the inconsistency of his trade approach during his term had already cast a long shadow over market confidence and contributed to ongoing volatility.
Ray Attrill, Head of FX Strategy at National Australia Bank, commented, “Markets are reacting instinctively. What we’re seeing is a clear reversal from the trajectory we’ve been on since the introduction of the tariff proposals.”
Trump-era tariffs had long eroded investor confidence in U.S. assets and triggered capital outflows, contributing to a nearly 8% drop in the dollar since early this year.
Looking ahead, the appeal process and any potential policy shifts will remain key concerns for global investors, especially as the wider implications for currency markets and the global economy continue to unfold.
In other currencies, the Australian dollar held steady at 0.6428 against the U.S. dollar, while the New Zealand dollar dipped 0.13% to 0.59595. Markets remain watchful for further policy developments that could reshape the current outlook.
