Federal Court Blocks Trump’s Sweeping Tariffs
12:21 Share

This message is brought to you by Abercrombie & Fitch. I've been ready for summer for a while, and now it's finally time for summer outfits. With the trip coming up, the A&F Vacation Shop has me covered. Abercrombie really knows how to do a lightweight outfit. Their tees, sweater polos, and linen blend shorts never miss. I wear Abercrombie denim year-round. Their shorts are no different and have the comfort I need for summer. Prep for your next trip with the A&F Vacation Shop.

Get their newest arrivals in-store, online, and in the app. ♪

A U.S. trade court strikes down President Trump's global tariffs, plus Elon Musk announces his looming exit from government, and Nvidia's business booms even as its CEO critiques U.S. efforts to shut China out of the global chips market. Shielding Chinese chipmakers from U.S. competition only strengthens them abroad and weakens America's position.

It's Thursday, May 29th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. A U.S. federal trade court has ruled that President Trump didn't have the authority to impose global tariffs, a decision that voids the levies that have sparked a sweeping trade war and threatened to upend the world economy.

The panel of judges from the Court of International Trade said the U.S. trade deficit didn't fit the definition of an unusual and extraordinary threat, as defined in a 1977 law cited by Trump to underpin most of the tariffs, blocking what had been one of the administration's boldest assertions of executive power. To put this ruling into context and look at how global markets are reacting, I'm joined by Deputy Finance Editor Quentin Webb.

Quinton, lawyers for the Trump administration have come out and said they will appeal this decision. And a White House spokesman said that, quote, it is not for unelected judges to decide how to properly address a national emergency, end quote. And yet they have done that. Where does this ruling leave things? Well, where this ruling leaves things is we already have this extraordinary level of uncertainty created by tariffs and the trade war. And if anything, it's

That has just become even more complicated. So this could potentially end up in the Supreme Court. We don't know. We know that this is a Supreme Court that has generally been sympathetic to a slightly broader interpretation of executive power. So potentially some of this could be reinstated. We also don't know whether the Trump administration could look to

use other tools to work on the same tariffs. This decision effectively says that some of this is in the purview of Congress rather than the executive, but there are other methods that can be used for the executive to introduce tariffs.

And we also don't know exactly how this will affect all of these ongoing trade negotiations with counterparties like the European Union and China. One of the reasons that markets are rallying is that investors think this effectively gives others a bit more leverage in negotiations with the Trump administration, because why would you rush to do a deal that could disadvantage you when you know that potentially the tariffs won't

hold at the end of the deadline that the Trump administration has imposed for talks. So there's already this kind of like unpredictability, which people in the Trump administration say is part of the negotiation strategy, part of Trump's art of the deal. And then to that, you add this second layer of uncertainty, which is that

There are other actors within the U.S. system, the states, small business, the courts that are pushing in a different direction. So it becomes harder and harder to work out where we go from here. And in terms of the market reaction we're seeing today, Quinton, you kind of alluded to that earlier, but it doesn't seem like we can say for sure that we are now in an all clear that the global trade war is fully off.

It seems like a kind of modestly positive reaction from markets, if you like. So stocks in Japan up, stocks in Europe broadly up, US stock futures up, pointing to a kind of higher

open today. And of course, strong results from NVIDIA also probably feeding into stronger sentiment for the US market. So on balance, you know, the global investor view is that this is good news. But of course, there are all these myriad uncertainties that we talked about. So hard to kind of take too definitive a stance on this. That was Wall Street Journal Deputy Finance Editor Quinton Webb. Quinton, thanks as always for the update. Thanks so much.

Elon Musk says his time in the Trump administration is coming to an end. Posting on X, he cited the looming expiration of his stint as a special government employee, a role limited to just 130 days and which would run out at the end of this month. A White House official said Musk's off-boarding started yesterday and added that he hadn't been a regular presence in the West Wing in recent weeks.

We exclusively report, however, that Musk had tried to influence U.S.-brokered deals as recently as this month. According to people familiar with the matter, Musk attempted to block an OpenAI-led deal to build a major AI data center in Dubai, unless it included his own startup, XAI. We report that he took that position after learning that OpenAI CEO Sam Altman would be joining President Trump's tour of the Gulf.

After Musk's complaints, Trump and U.S. officials reviewed the deal terms and decided to move forward with the agreement, which involved OpenAI, Oracle, SoftBank, NVIDIA, and Cisco. Musk's blowup resembled his reaction in January after learning about a half a trillion dollars in U.S. investments that were announced by the president involving OpenAI, Oracle, and SoftBank. Musk didn't immediately respond to a request for comment.

Coming up, shares of NVIDIA rise after the chipmaker posts another quarter of record-breaking sales. But CEO Jensen Huang says things could have been even better without restrictions on selling to China. We've got that story and more after the break.

This episode is brought to you by Amazon Prime. From streaming to shopping, Prime helps you get more out of your passions. So whether you're a fan of true crime or prefer a nail-biting novel from time to time, with services like Prime Video, Amazon Music, and fast, free delivery, Prime makes it easy to get more out of whatever you're into or getting into. Visit Amazon.com slash Prime to learn more.

NVIDIA reported bumper earnings yesterday, beating analysts' expectations despite it being effectively shut out of China as the Trump administration continues to restrict the sales of chips to the country's market. The company projected $8 billion in lost revenue for the quarter just from being unable to sell chips to China, topping the more than $5 billion figure it projected last month.

WSJ China tech reporter Lisa Lin told us that when it comes to China, NVIDIA essentially finds itself in a holding pattern. Jensen Huang, the CEO, said the company is exploring options on what it can sell to China that's actually consistent with U.S. limits.

but it hasn't come up with something for the market yet. One thing you can be sure, though, the company would still want to continue to sell to China, because I've been trailing Jensen in Taiwan and just monitoring his activity around the globe. And one thing that's really stuck out from him is that his public narrative in the recent weeks has constantly revolved around the importance of the China market and the absolute necessity for American companies to participate in it.

He belabored the point when he was in Taiwan last week, and he repeated that point again during the earnings call with investors yesterday. He's never been so vocal in the past. The U.S. has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it's clearly wrong. But despite being cut off from Chinese markets, Lisa says NVIDIA still has options.

In recent weeks, you've seen Jensen Huang follow the Trump administration to the Middle East, where they have struck deals to sell hundreds and thousands of their top-end AI chips. Jensen's been really on the plane, flying everywhere from Taiwan to Europe, trying to sell AI systems and infrastructure to governments around the world who are interested in it. So even if China doesn't materialize, they've got a lifeline in terms of government demand for their AI systems.

Shares of HP are down in off-hours trading after the computer and printer maker said it's preparing to raise prices on certain products and is accelerating efforts to move more of its production out of China. The plans come as HP lowered its outlook for the year, citing higher-than-expected tariff costs and weakening demand for hardware in the recent quarter.

Tariff uncertainty has led the company to increase production in countries such as Vietnam, Thailand, India, Mexico, and the U.S., with chief executive Enrique Lórez saying HP expects nearly all of its North American products to be built outside of China by the end of June. And rounding out Wednesday's earnings, Salesforce raised its full-year sales outlook after posting a jump in Q1 earnings and revenue as AI continues to boost its business.

Here was Chief Executive Mark Benioff. I mean, sometimes you have a quarter when everything is going right for you. That means, you know, revenue is going right. Bookings is going right. You know, you're kicking off the quarter. You know, Q1 is always a high-risk quarter, but even currency is moving in the right direction.

Salesforce has been investing heavily in artificial intelligence and said it's now closed 8,000 deals with its AgentForce AI chatbox platform, up from 3,000 in the prior quarter.

And we are exclusively reporting that Paramount Global has in recent days offered $15 million to settle President Trump's lawsuit against CBS News. People familiar with the situation say the sides are far apart on terms, though, with Trump's team seeking more than $25 million and an apology from CBS over allegations that it deceitfully edited a 60 Minutes interview with Democratic presidential candidate Kamala Harris to make her sound better.

CBS has said the broadcast was not doctored or deceitful. According to the people familiar with the matter, Trump's team has threatened another lawsuit against CBS related to alleged bias of its news coverage.

And that's it for What's News for this Thursday morning. Today's show was produced by Kate Boulivant. Our supervising producer was Daniel Bach. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.