Trump Global Tariffs Blocked, Musk Leaves DOGE, Nvidia's Upbeat Results
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Thursday, the 29th of May in London. I'm Caroline Hepka. Coming up today, Trump's tariffs blocked a U.S. trade court rules that most of the U.S. president's sweeping global levies are illegal. Markets gain as traders digest the latest twist in the trade story, as well as upbeat NVIDIA earnings.

Plus, the UK government says that it is prepared to use legislation to force pension funds to invest in private markets and the domestic economy. Let's start with a roundup of our top stories. A US trade court has blocked most of President Donald Trump's global tariffs. A panel of three judges at the US Court of International Trade in Manhattan

issued a unanimous ruling that they were illegally imposed under an emergency law. The judges rejected the government's argument that President Trump had authority to unilaterally issue tariffs under a law intended to address financial transactions during national emergencies. The court has ordered the tariffs to be stopped within 10 calendar days. We got reaction from the former IMF chief economist Olivier Blanchard.

I'm not a legal scholar, but it was clear that the so-called reciprocity tariffs, which was 10% across the board, doesn't have a national security justification, which is what he has used to actually put tariffs. So I think this one is probably in trouble.

There's going to be legal steps, but I suspect that he will have to take this one off. He'll replace it by something he will basically, I think, try to get tariffs against particular countries. We'll see how it goes. It's just one more level of uncertainty.

Olivier Blanchard, now of the Peterson Institute, speaking there to Bloomberg. As President Trump's Justice Department said that it will appeal the ruling, a White House spokesperson added that it is not for unelected judges to decide how to properly address a national emergency.

The order covers President Trump's global 10% flat tariff, increased rates on China and other countries, as well as fentanyl-related levies on China, Canada and Mexico. Other tariffs imposed under different powers by President Trump, including on steel, aluminium and vehicles, remain in place.

Now, the court's ruling has led to a surge in stock markets. The S&P 500 and Nasdaq futures gaining 1.6% and 2% respectively, while shares in Asia are rising 0.6% on the news. Meanwhile, the dollar strengthened on the decision, but it remains significantly down from its February high. Timothy Moe is chief Asia-Pacific equities strategist at Goldman Sachs. He's urging caution on the possible upside for markets.

With the S&P and other global markets having rallied well over 20% from the lows in early April, April 7th for the S&P, April 9th for the MSCI Asia Pacific X Japan Index, a lot of optimism has already been priced in. So I think we have to say this is a fundamentally constructive development from the standpoint of lowering tariff risk, but not all the risk is off the table and markets have well priced that.

Timothy Murray adds that while this might be considered a body blow, it's not the final rendering. Now, the comments come after President Trump's century-high tariffs and his plan to cut taxes in the US, which has spooked investors who caught on to a sell America trade amid concerns that the trade war would hurt global growth.

Now, in other news this morning, billionaire Elon Musk has announced that he's stepping down from President Trump's administration. The Tesla CEO shared on X yesterday that his time as a formal advisor in the White House is over. By law, Musk's status as a temporary government worker was set to expire as soon as tomorrow. The exact date determined by the number of days worked.

This does raise questions about the Department of Government efficiency effort that he spearheaded, which fell short of its own high expectations for cost savings. His departure comes shortly after Musk criticised the president's flagship tax bill in a recent interview and after he told Tesla investors in April that he would devote more time to the firm.

In earnings news, NVIDIA CEO Jensen Wang says that Chinese AI rivals are taking on US firms as their technology develops. Speaking to Bloomberg, he warned that companies like Huawei and others are filling the void left by the American departure from the Chinese market.

Without American technology, the availability of Chinese technology will fail the market. And so, you know, whatever we offer has to at least be competitive and has to add value to the market. That was NVIDIA's Jensen Wong speaking there to Bloomberg. He went on to highlight the shrinking gap between U.S. products and their Chinese alternatives, pointing to similarities between Huawei's latest AI chip and NVIDIA's own H20 product.

US restrictions on exports to China have effectively locked NVIDIA out of the country. This is the largest market for chips in the world, causing expected losses of $8 billion in sales for NVIDIA this quarter alone.

Back to patient starts on interest rates, blaming the rising risk from tariffs to both inflation and unemployment in the US. The minutes from the central bank's May meeting pointed to an increase in economic uncertainty since April. Federal Reserve reporter Amara Omokwai says that the document underlines the wait-and-see approach from many policymakers.

And the minutes underscore once again just how much tariffs are complicating the economic outlook and how focused Fed officials are on ensuring that tariffs do not lead to persistent inflation or inflation expectations becoming unchecked. Fed reporter Amara Omukwai speaking there. Even with the latest tariff reprieve, duties on imports do remain historically elevated and many businesses have put hiring and investment decisions on hold in the U.S.,

So that's on those Fed minutes, as I say. Here in the UK, though, very interesting story. So the government says that it is planning to require pension funds to invest in private markets and the domestic economy. It's a move that's widely opposed by the City of London's investment managers. Bluebecks James Warkock has more now.

Two weeks ago, Chancellor Rachel Reeves gathered with Britain's major pension funds to agree to put 5% of their assets into UK private markets. Bloomberg asked her at the time if she would ever force them into it. We don't need to mandate them if people are willing to sign a voluntary accord. And today we've shown that that is possible with 17 businesses representing 90% of active savers signing up voluntarily to this.

Now the Chancellor plans to legislate to give herself the power to set legally binding targets anyway, just in case. Some of the CEOs who signed up to the pact are worried. They fear acting in the best interests of their savers will clash with investing in the government's priorities. In London, James Wilcock, Bloomberg Radio.

So those are a few of our top stories for you this morning. Let's think about the markets then. As we do see this, another tariff bombshell. MSCI Asia Pacific Index up by 0.6%. You've got the KOSPI up by 1.7%. Japanese stocks higher this morning. And the stock futures are flying right now. NASDAQ futures up almost 2%. S&P 500 E-mini futures up 1.6%. European stock futures also up by 1.3% this morning.

on this ruling by the court in Manhattan. As for 10-year Treasury yields, they trade currently at 4.5% by a couple of basis points this morning. And the dollar is also stronger by a quarter of 1% on the Bloomberg Dollar Spot Index this morning. There is still, though, you have to layer into the enthusiasm in markets for the reversal of tariffs, the fact that it could also set up a major clash effectively between the US judiciary and the executive branch

So maybe there's more uncertainty for tariffs to come. Anyway, we're going to talk a bit more in a moment with all the analysis about that U.S. trade court decision blocking President Trump's global tariffs. And we'll also get you the market reaction to it. It's a hugely important story. But before we get to that...

There's something else that has caught my eye this morning. Traders do always love a pithy term for a big idea, don't they? Tina, there's no alternative. FOMO, fear of missing out. And now, taco, Trump always chickens out. Have you heard this phrase? It has been adopted by traders. Investors basically seizing on market declines right after the president makes tariff threats because they expect him ultimately to relent.

For example, when he did that last week with Europe and the threat of 50% tariffs, then he delayed it. Well, he was asked about this very issue. A reporter asked President Trump about this. And he sounded pretty annoyed about this idea. And he went on to explain why he was doing this and the idea about negotiation. Have a listen to what he said.

It's called negotiation. You set a number. And if you go down, you know, if I set a number at a ridiculous high number and I go down a little bit, you know, a little bit, they want me to hold that number. One hundred and forty five percent tariff. Even I said, man, that really got up. You know how it got? Because of fentanyl and many other things. And you added it up. I said, where are we now? We're at one hundred and forty five percent. I said, whoa, that's high.

President Trump there. Well, he bristled, really, at the idea that traders sort of see his draconian trade threats as blustered by any big sell-off related to Trump tariff threats. But, of course, that was before the tariffs were blocked by a panel of three judges in the United States. So one story that really caught my eye today. But speaking of that court decision, let's get more details on it, because those judges blocking most of President Trump's

global tariffs, deeming them illegal, something that the Trump administration is appealing. So what does the ruling mean? Joining us now, our Hong Kong News Desk editor, Jill Desis. Good morning, Jill. Which tariffs is the court blocking and which remain? Can you sort through them?

Yes. Good morning, Caroline. So as you just said, this is a pretty significant ruling because it actually does affect most of the Trump tariffs. This is specifically targeting the ones that he invoked through executive order. The idea behind it was that he was declaring the use of some emergency powers in order to affect these tariffs that the court is saying was illegal. And so this is mostly the global flat rate tariff that Trump has.

orchestrated. Also, all of those elevated rates on China, some others, the fentanyl-related tariffs on China, Canada, and Mexico. So what it doesn't include are tariffs imposed under different powers. So there's levies that are unaffected that included tariffs on steel, aluminum, and automobiles. But aside from that, I mean, when we're talking about that big

blanket global tariff rollout that Trump was talking about, that really being the target of this and what's now in question in the courts is, I think, very significant. Yeah, absolutely. This is the IEPA law that President Trump cited as a justification for the tariffs, a law dating back to 1977. Look, the court has given the administration 10 calendar days to act, but then the government's also appealing the ruling. So what does that mean?

Well, so this is where it gets very murky. So what that court order says is that the administration has 10 days to, you know, basically follow this effectuate. They said, you know, to effectuate the order. But the order also didn't provide any specific directions of steps that the Trump administration must take to unwind the tariffs. I mean, again,

You know, it's it's, you know, sort of this idea of, OK, well, if you've got 10 days, that's that just mean in 10 days time are all the border agents going to stop collecting duties on anything crossing over? I mean, it's kind of difficult to imagine how exactly the Trump administration would enforce that or, you know, whether it wants to enforce that, I guess, for one thing. The other thing.

thing that's really in question here is obviously because the Trump administration is appealing this. So the trade court in New York that we've been talking about, that's part of the U.S. federal court system. So you can imagine a scenario where the Trump administration is now doing this, it's appealing this to a federal appeals court. It's something that could end up in front of the Supreme Court of the United States. And so really the question there is whether an appellate court or if it

does end up before the Supreme Court, whether they, you know, institute a motion to stay any lower court decision so that, you know, we can kind of continue to see how all of this is going to play out. But again, I think that's just a long, rambly way of saying it's still very murky on how exactly, you know, this all plays out right now.

Yeah, okay. So then any response about tariff relief from China? Of course, a major issue between the U.S. and China. Yeah, I mean, obviously, we're still waiting for a response there. I mean, we've obviously reached out to those relevant channels. But I imagine there's got to be something coming down the pipeline here. I think at this point, Caroline, like...

you know, obviously this isn't the end of the tariff story and, you know, any chance that, you know, that, you know, a higher court does ultimately say that Trump can go ahead with these tariffs. But I do think that it's just worth highlighting that, you know, this still remains a blow in the sense that, you know, it adds to that additional uncertainty over whether Trump can enforce, you know, what was really kind of the signature piece of his tariff agenda. And when you consider the fact

that I think, you know, really two things to mention here. I mean, first of all, there's still a lot of trade deals with countries around the world that have not yet been completed. So a big question as to how this actually enters the negotiations there. And then also, I mean, you know, the tariffs were kind of held up as this idea of providing revenue to offset, you know, the impact from tariffs from Trump's

you know, big, beautiful tax bill. So I think that there's still a lot to kind of juggle here. And I think it's going to be really, really interesting to see whether this goes forward and, you know, whether these tariffs actually end up taking effect.

Yeah, absolutely. And what the reaction from businesses might be also, whether there could be front loading of imports again, for example. I mean, the Federal Reserve minutes yesterday, also, they cut down on the growth expectations for the US 2025-2026. But all of that now looks again a bit out of date, doesn't it?

Yeah, I mean, you know, it reminds me of back when, you know, originally you were seeing some of these tariffs go into effect or you had, you know, Trump announcing, you know, just higher tariffs or lower tariffs or changing his mind on different things. And, you know, how many different, you know, really starry investment banks were just revising their global growth forecasts, you know, left, right and center. I mean, it does, I think, just add to this, you know, continued story of a lot of uncertainty, as you mentioned, particularly for a lot of those exporters that have to worry about whether they should

continue front-loading things or whether they should change some of their strategies. And I think, yeah, it just really, really adds to that overall volatility picture. It certainly does. Yeah, indeed. And the Fed Minutes also showed that policymakers were boosting their inflation expectations too. But as you say, policymakers pointed to uncertainty. You're pointing to uncertainty. Jill, thank you so much for being with me this morning. Our Hong Kong News Desk editor, Jill Desis.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

If you're going there, so are we. Book now on emirates.com. Fly Emirates. Fly better.

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Well, investors, of course, are scrambling to understand the consequences of the court ruling. Stock futures are celebrating. The dollar's caught a bid. But does it mean more uncertainty in markets in the days ahead? Our markets live strategist, Mary Nicola, joins me now. Mary, good morning. How are markets reacting? How do you see what's going on with investors?

As you pointed out, they're celebrating this. It's just been such a good day for stocks. It's been a good day for sentiment with equity futures rising. You've seen across the board green even in Asia. So it has been a really strong day in terms of essentially the Trump administration has been dealt a big blow on tariffs and the market is realizing that this is

great news, especially for growth, not only for growth in the US, but growth globally. So there could be an unwind of just what expectations are for growth. And that's what's really fueling sentiment. Yeah. Does it change things, though, structurally when it comes to the US dollar, which has been on this big leg lower? This morning, we were up a little bit. Does it change the structural setup? So I don't think so, because I think

There's still a lot of uncertainty out there in terms of how this all plays out. Of course, now we're in an environment where the Trump administration is going to appeal with the courts. Then we're going to see what if it gets to the Supreme Court. So it's going to be a long, drawn-out battle. And how it ends will be difficult to gauge as of now. And then, of course, you have an added threat

concern over, you know, does the Trump administration even abide by the rules of the court and the court order, as we've seen in some cases recently where they haven't? So it's, and that would

really bring up concerns about the US's rule of law and just bring back that sell America concern, the sell America trade and concern over policies and how they are unfolding in the US. Yeah, so that's what's happening in the US. But of course, closer to where you are, the response in China and Asia, what would you pick out?

Yeah, I think what has been the clearest thing, because especially in Asia, we've had both the combination of NVIDIA results and then, of course, this tariff reprieve. But I think what's interesting is just how currencies have reacted, because obviously dollar downside was a big, big, big trade. And then, of course, we had comments from the Bank of Korea governor who said that,

FX was discussed. So there is still a lot of appreciation pressure on these currencies, especially to fix the imbalances that they have with the U.S. And that, yes, sure, today we're seeing the dollar as a rising star, but it still doesn't take away the appreciation pressures on the currencies in the region. And that's not going to go away.

This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak Europe.

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