Trump's Trade War Upended by Courts; Nvidia Rallies on Upbeat Forecast
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with new developments in the global trade war. A three-judge panel of the U.S. Court of International Trade has blocked many of President Donald Trump's tariffs.

On imports from dozens of countries, the court has declared them illegal, throwing his tariff strategy into turmoil. We get more from Bloomberg News Senior Editor Derek Walbank. All of the Liberation Day stuff that Donald Trump did, the 10% global reciprocal tariffs, the reciprocal trade deficit-based tariffs that were put on top of that, all of that's done under this emergency authority. And essentially what the court said was you can't do that and you have 10 days to undo that.

Now, the Trump administration is appealing this decision, so it's possible that the U.S. Supreme Court may ultimately have the final say. It also puts negotiations with foreign countries into a bit of a question mark formation because the Trump administration now is negotiating from a position of substantial more weakness because there's a

possibility that even as countries negotiate, there may not be a full threat on the other side of the ledger. Bloomberg News senior editor Derek Walbank says the ruling does not affect President Trump's first term levies on many imports from China or sectoral duties planned or already imposed on goods, including steel.

And again, Nathan, as we heard, the Trump administration is already promising to appeal. A White House spokesman says unelected judges should not have the power to decide how to properly address a national emergency. Commerce Secretary Howard Lutnick says the tariffs are an important foreign policy tool. In a filing in this case, Lutnick says India and Pakistan only agreed to a ceasefire this month after President Trump offered both countries trading access.

And even after the court's ruling, Japan's top trade negotiator is still headed to Washington today for a fourth round of talks with the U.S. As for the Wall Street reaction, Karen Goldman Sachs says the ruling is only a temporary setback to the president's trade agenda and can be offset by other taxes. The bank says the judgment halts 6.7 percentage points of levies announced this year and the White House could use other tariff tools.

to make up for that. For full tariff coverage, stay with Bloomberg. Today, we speak with White House Trade Counselor Peter Navarro. That's at 845 Wall Street Time on Bloomberg Radio, Bloomberg Television, and the Bloomberg Podcasts page on YouTube.

Before this decision came down, Nathan, Wall Street analysts have been debating whether President Trump is willing to follow through on his trade threats. A columnist for the Financial Times coined the phrase the taco trade, as in Trump always chickens out. President Trump was asked about it in White House remarks heard on Bloomberg Radio. Chicken out. I've never heard that. You mean because I reduced?

China from one hundred and forty five percent that I set down to one hundred and then down to another number. And I said, you have to open up your whole country. And because I I gave the European Union a 50 percent tax tariff and they called up and they said, please, let's meet right now. Please, let's meet right now.

President Trump says when it comes to backing away from high tariff rates, it's called negotiation. Well, Karen, markets are getting a lift on the tariff ruling. They are also seeing a boost from earnings from NVIDIA. Sales for the AI chip giant rose a better than expected 69 percent to 44.1 billion dollars.

NVIDIA says it expects revenue in the second fiscal quarter to come in at about $45 billion. That's despite new export restrictions costing about $8 billion in Chinese revenue. We got reaction from Bloomberg Intelligence Senior Analyst Mandip Singh.

Had it not been for the China write-down, this company would have posted revenue which was 5% higher than the $44 billion number. And the guide would have been almost 15, 20% higher. So we're talking about $8 billion in lost revenue. So clearly...

whatever they're doing, they are able to make up that revenue lost in China with some other customers because it's in line with consensus. That's Bloomberg Intelligence Senior Analyst Mandeep Singh, and shares of NVIDIA are up more than 5% in early trading.

Nathan, NVIDIA CEO Jensen Wang is warning that Chinese AI rivals are now more formidable. In an interview with Bloomberg after the earnings report, Wang says 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 fill the market. And so

whatever we offer has to at least be competitive and has to add value to the market. And NVIDIA's Jensen Wong added that U.S. restrictions on exports to China have effectively locked NVIDIA out of the country. He joined Bloomberg's Ed Ludlow for a special edition of Bloomberg Technology. For the full conversation, head over to the Bloomberg Podcast channel on YouTube. And Karen, there are

new sources of tensions this morning between the U.S. and China. The U.S. plans to start aggressively revoking Chinese student visas. Let's get the latest on that with Bloomberg's Lisa Mateo. Lisa, good morning. Good morning, Nathan. Is Secretary of State Marco Rubio making that announcement in a statement saying that it would include those with connections to the Chinese Communist Party or studying in critical fields? Now, the U.S. will also be taking a closer look at future visa applications from the People's Republic of China and Hong Kong. And that

decision, well, it comes just weeks after the U.S. and China negotiated a truce in their tariff war. And now China blasting the move. Its foreign ministry spokeswoman, Mao Ning, calling it, quote, politicized and discriminatory, adding that it's only going to further undermine the U.S.'s image in the world and national reputation. China had the second most students in the U.S. of any country in 2024, just behind India. Lisa Mateo, Bloomberg Radio.

All right, Lisa, thank you. Elon Musk's time as formal advisor to President Trump is coming to a close as his business empire remains in flux. Bloomberg's John Tucker joins us with the latest. John, good morning. Good morning, Karen. This move comes shortly after he gave an interview on CBS critical of President Trump's biggest legislative priority as not doing enough to reduce federal deficits. I was like disappointed to see the massive spending vote, frankly, uh,

which increases the budget deficit, not just decrease it, and that reminds the work that the Doge team is doing. Well, by law, Musk's status as a temporary government official was set to run out as soon as May 30th. A White House official said Musk began the off-boarding process last night. Musk's campaign to slash the sides of the U.S. government sent shockwaves through Washington, with some agencies eliminated outright and tens of thousands of federal workers purged or convinced to accept buyouts.

But the initiative fell short of its own high expectations for cost savings and the backlash against smart concerns among investors. Tesla vehicle sales, for instance, fell to a nearly three-year low in the first quarter of the year. The stock price plummeted. A pre-market Tesla right now up almost 3%. I'm John Tucker, Bloomberg Radio. All right, John, thank you. And Tesla plans to launch its long-awaited robo-taxi service in Texas on June 12th. That's two weeks from today.

Bloomberg News has learned the company's been testing autonomous vehicles in Austin, including a recent test with no one behind the wheel. Sources tell Bloomberg the previously unreported date was discussed internally and could still change. Tesla plans to start with a fleet of around 10 self-driving robotaxis in Austin before expanding to 1,000 within a few months.

It's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. A judge quickly denied a request for a mistrial during the third week of the Sean Diddy Combs sex trafficking trial. The request came after the testimony of an arson investigator who responded to Kid Cudi's home when the rapper's car was torched with a Molotov cocktail.

Defense attorneys have said Combs was simply not involved and there's no way to unring this bell.

Reality stars Julie and Todd Chrisley aren't the only people getting presidential pardons from Donald Trump. John Rowland was governor of Connecticut when he was jailed for drafting a fake consulting contract. New York Congressman Michael Grimm got busted for tax evasion. President Trump also says he's open to pardoning the men who were convicted in a plot to kidnap Michigan Governor Gretchen Whitmer.

I'm going to look at it. I will take a look at it. It's been brought to my attention. I did watch the trial. It looked to me like somewhat of a railroad job, I'll be honest with you. Fourteen men were charged and nine were convicted. There's growing pressure on Israel to agree to a ceasefire plan put together by the White House. Meanwhile, families in Gaza stormed a U.N. warehouse for much-needed food.

Dr. Farah Sidwa is an American trauma and general surgeon who volunteered in Gaza. Gaza is a disaster, and the main impact it's having is on children and on the health care workers themselves, as far as I can tell. Dr. Sidwa spoke to ABC. Harvard says many of its foreign students are seeking to transfer from the university. It comes after the Trump administration is targeting Ivy League schools, particularly Harvard, by casting them as ideologically biased students.

and is taking action to limit their ability to enroll foreign students. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you.

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Time now for the Bloomberg Sports Update. Here's John Stashour. John, good morning. Good morning, Karen. All the conference final series in the NBA and Stanley Cup playoffs. 3-1 after four games. In the first of the game, fives. The team ahead in the series able to win and advance in the NBA. That's Oklahoma City. A blowout win over Minnesota. The Thunder led 26-9 after the first quarter. 65-32 at halftime. They won by 30.

It's OKC's first NBA final since 2016. Florida Panthers lost game four to Carolina, and the Hurricanes were up 2-0 second period of game five. Panthers then scored three times in the second. Carolina tied it up, eight and a half minutes into the third. Still 3-3 about four minutes later. ...for Kulikov. It's a park-off. Reinhardt with it now.

He'll work it into the Carolina zone. Barkoff in the corner. Checked by Orloff. Back to the net. Barkoff. Checks him free. In front. There's Irver Hagee. Finds the wide open side of the net. And he puts it in to put Florida back up.

Back out front, 4-3. TSN, the call. Panthers at an empty netter. 1-5-3. They're ahead of the cup final for the third year in a row. The Knicks face an elimination back home for their game five with Indiana tonight. Will Van Helg. Knicks only 3-5 at the Garden in the playoffs.

Pacers are 6-1 on the road. They're also 11-0 in games other than game threes. Yankees in Anaheim scored in the first inning. That was it. 1-0 win over the Angels with Clark Schmidt and three relievers teaming on a five-hitter. Yanks sweep the series. They've won 16 of their last 20. The Mets' four-game win speed came to an end, a 9-4 home loss to the White Sox. John Stasch, Bloomberg Sports.

Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. A centerpiece of President Donald Trump's economic agenda has just been upended. The U.S. Court of International Trade has ruled the president's Liberation Day tariffs illegal, giving him up to 10 days to start removing them.

Stocks are rallying this morning, but principal asset management chief global strategist Seema Shah says she's not sure this will last. President Trump is going to find other means to push through his agenda.

I think, if anything, actually just prolongs the uncertainty. Seamus Shaw with Principal Asset. For this morning, we're joined by Bloomberg News Senior Editor Bill Ferrys. Bill, good morning. Walk us through this decision and what this means for where President Trump's trade agenda stands now. Good morning. Good morning, Nathan. Yeah, it is a potential body blow to the Trump administration's plan for tariffs.

And a big source of revenue. We'll have to see how this plays out. But the U.S. Trade Court here ruling a unanimous 3-0 decision that the Trump administration's, many of the Trump administration's tariffs are illegal and have to be removed within 10 days. This is not all of the tariffs, but it's a lot of the ones we're most familiar with from the last few months in office.

They include the tariffs against China, Mexico and Canada over the trade in fentanyl. They include that kind of 10 percent across the board flat rate tariff against just about every country in the world. That's the tariff. Those reciprocal tariffs are getting in the middle of negotiations right now.

There are still some tariffs, mostly dating back to the first Trump administration that remain in place. But the court essentially argued here that the administration's use of a national security threat to impose these tariffs was not valid. They said, listen, things like fentanyl, things like the trade deficit that the administration cited, they may be problems for the U.S., but they're not national security threats that allow you to do this. So

The Justice Department has already announced that they plan to appeal the decision. It could be at the Supreme Court within a matter of probably weeks, and we don't know how that will go. But for right now, you see the market reaction. It is potentially a big blow against this administration. So while this potentially continues to play out in court,

Bill, what could this mean for trade flows? What could this mean for trade negotiations that presumably are still underway? It really just throws another volatile wrench into the whole process. So you have those negotiations ongoing. I think they're going to continue. As that quote you used in the leading end of the segment said, President Trump, he's a tariff guy. It's his favorite tool. He is...

If this is ruled out, he's going to try to find another tool that allows him to impose tariffs. So I think it mostly just means the uncertainty and the volatility are going to continue for a while. In our last 30 seconds, could this be overridden by Congress? I understand there's a bill that would give the president broad tariff authority. Is that going anywhere?

Well, there's always that potential. I mean, we haven't seen, you know, every vote in Congress continues to go down to the wire because of the tight margins the Republicans have. I don't think you're going to get a lot of Democratic votes for that kind of legislation.

But the president does have other tools. He used them in his first term. He may have to try to use them again if this ruling stands. Okay. Bill Ferry, senior editor for Bloomberg News on the breaking news from overnight to many of President Donald Trump's tariffs deemed illegal in U.S. international court. Karen.

Nathan, repeating some of our top stories this morning, President Trump is bristling at the idea of a taco trade around his tariff threats, or Trump always chickens out. The president says when he backs away from high tariff threats, it's called negotiation. Secretary of State Marco Rubio says the U.S. will start aggressively revoking visas for Chinese students with a focus on links to the Chinese Communist Party. China says...

The move will harm people-to-people relations. And Elon Musk says his time as a formal advisor to President Trump is coming to a close. The billionaire's role as a special government employee was set to run out as soon as tomorrow. We have more on those stories coming up on Bloomberg Daybreak. But now we want to turn back to our interview with NVIDIA CEO Jensen Wong. He joined Bloomberg technology host Ed Ludlow after the chip giant reported an upbeat sales forecast.

Wang says NVIDIA is still poised for exponential growth, and he also taught competition in China. Let's listen in. We've got a whole bunch of engines firing right now. The biggest one, of course, is the reasoning AI inference. The demand is just off the charts. You see the popularity of all these AI services now, ChatGPT, Gemini,

you know, so on and so forth, Grok. I mean, they're just doing incredibly well across the board. And all of the APIs that they serve out and all the agentic AI services that are built on top of them, they're all doing incredibly well. I think that there's just a giant breakthrough

in in ai's capability and inferencing has just become a giant workload second people realize that blackwell is just a home run mv link 72 is a home run architecture we designed it to be a thinking machine a reasoning ai system and i think people now the confluence of the the the breakthrough and reasoning ai and the availability that you know the the now the emergence of of grace blackwell mv link 72 perfect timing

I think that that's at the core a big part of it. And the second part of it is that our supply chain is growing and we're really ramping it up and they're doing fantastically for us. And so all of these things are all coming together. And so it is fair to say that some of that additional supply on Blackwell and the demand for Blackwell kind of made up for the opportunity lost in China, at least in the outlook for this current period.

Yeah, I guess so. But you can't underestimate the importance of the China market. This is the second largest AI market. This is the home of the world's largest population of AI researchers. And we want all of the world's AI researchers and all of the world's developers to be building on American stacks.

And so irrespective of the near-term revenue success that we have, we can't ignore the fact that the Chinese market is very important. You explained again in some detail that at least in the Hopper architecture, you have engineered down to the lowest spec possible. It's not possible to do anything different with Hopper for the Chinese market.

But in your consideration for a different architecture or a chip for the Chinese market, is that what we're talking about, a new design or new class? And have you made that proposal to the administration, just designing from the ground up a new chip? We're still thinking through that. The limitations are quite stringent, quite limited, if you will. H20 is...

as far down as we could take a hopper. We don't know how to make it even less. And so that's really the limit. The limitations are quite stringent. So we have to really think through it. Whatever we make ultimately has to add value to the market. And so it's a really tight rope because

because the Chinese competitors have evolved and advanced greatly over the last year. Like everybody else, they're doubling, quadrupling their capabilities every year, and the volume is increasing substantially. And remember, these are data center chips. They don't have to be small. They could be quite large. And without American technology, the availability of Chinese technology will fail the market. And so...

Whatever we offer has to at least be competitive and has to add value to the market. Jensen, does Huawei have an AI accelerator or a GPU that is performant as H20 or is performant of other classes of GPU that you make? Huawei's technology, based on our best understanding at the moment, and we have a lot of ground truth there,

is probably comparable to an H200. They've been moving quite fast and they've also offered this new system called Cloud Matrix that scales up to even a larger system than our latest generation Grace Blackwell. Huawei, as you know, is a formidable technology company and they're not sitting still and they look for ways to compete. They're quite formidable.

And that was NVIDIA CEO Jensen Wong speaking with Ed Ludlow on a special edition of Bloomberg Technology following the AI chip giant's latest earnings. For some more morning after reaction, we're joined by Dan Ives, Global Head of Technology Research at Wedbush Securities. Great to have you back with us, Dan. I know you've been bullish on NVIDIA for some time, so I'll ask, did these latest results from the AI chip giant meet or exceed your expectations? Good morning. Exactly.

Exceed the godfather of AI, Jensen and NVIDIA delivered in a huge fashion because even when you take out the China number, demand outstripping supply eight to one.

And I think this is what investors want to focus on. What do I ask about it in terms of Middle East sovereigns? There's one ship in the world fueling the AI revolution, and that's NVIDIA. When you hear Jensen Wang say that the Chinese AI market is quadrupling their abilities, does that give you any reason to...

have any concern about where NVIDIA could be going from here? I think that's the smart move that he's saying. Because the reality is, is that he doesn't want Trump, because of the restrictions, essentially having NVIDIA handing over a good piece of their China business to Huawei. And that's essentially what's happened. They're about $8 billion in the next quarter, you know, that basically they had to take out because of it. So I think this is all a game of high stakes poker.

And that's a little shot across the bow from Jensen to Trump saying, look, you stop tying our hands behind our back. Let us go after the China market. Well, if the hands are tied behind the back, at least for now, they mentioned the $8 billion in potential China revenue that they're going to have to write down in the next quarter. How do you see NVIDIA making that up? Look, Middle East and sovereigns are going to make up a good piece. They're

So they want, ultimately, a seat in the front of China. But when you look over the long term, China is going to have to be a market that reopens to NVIDIA. And I think Trump administration recognized that to some extent. Jensen recognized that. And I think the market is basically saying, like, look, NVIDIA without China is probably a $4 trillion market cap.

Any improvement on these negotiations and you get to a much higher stock because there's only one ship.

That's fueling the AI revolution. It's NVIDIA. So do you see NVIDIA providing any other products that could fill the gap, at least in the short term? Wang mentioned that the H20 chip can't necessarily fill that gap as much as he'd like. But are there other tools in the toolbox for NVIDIA in China? Well, I think there are. And I think that

the market is basically reading through and saying over the next three to six months, they're going to figure out some restricted ship that they could basically sell into China. And that's why the $8 billion exporter, it's probably half of that that ultimately disappears, right? I think they're definitely going to get back a piece of that. But Nathan, when you think about autonomous robotics, the use cases,

consumer. It's a fourth industrial revolution. And that is not being stopped. This AI party, it's still 10 p.m. It was 9 p.m. And it goes to 4 a.m. And Trump's not shutting down that AI party. In the time we have left, Dan, I want to get your reaction to this ruling from the U.S. trade court on President Trump's tariffs, deeming them illegal. What does that mean for the market structure going forward?

I think it just, this has been the anticipation about this ruling, what was going to come through. And I think it just shows that a lot of these tariffs, like Trump administration is going to have to fight through court to ultimately try to get them back. And the market's basically saying not so fast. It's bullish. And I think it shows to some sort of compromise that they're going to have to come to because you can bully the courts. You can bully the,

the market. And I think more and more you're seeing the Trump administration take steps back on these tariffs. You've seen it step by step, take steps back since April 2nd. So just quickly, the taco trade is a thing for you? Look, I think the reality is whether the boy cry wolf, however you want to think about it,

EU being a good example, Friday, Memorial Day, 48 hours later, the wait a month. Apple moving iPhone production to the US, that's a fairy tale. So you have to get to what the reality is of this situation versus the threats. And the market's trying to game it out. And that's why right now the bears, they're in their caves and hibernation mode.

And they're scared of what's after. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg.

99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long.

I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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