Global markets RISE as Donald Trump loses major legal battle over controversial tariffs

The US Court of International Trade said the president lacked the authority to impose his "liberation day" tariffs, which were only introduced last month. The court has given Trump ten days to cancel most of them.

The ruling led to a strong rally in Asian markets. Japan's Nikkei 225 index, which is heavily weighted towards exporters, rose 1.9 per cent. South Korea’s Kospi index also climbed 1.9 per cent, while Hong Kong's Hang Seng gained 0.9 per cent.

In the US, the S&P 500 futures rose 1.5 per cent and tech-heavy Nasdaq futures were up 1.9 per cent in pre-market trading.

Europe also opened higher, with Germany's Dax rising by 0.9 per cent and France's CAC 40 up 1 per cent. The continent-wide Stoxx Europe 600 index increased by 0.5 per cent.

The UK’s FTSE 100 initially jumped by 0.6 per cent on the news before trimming its gains. British shares rose again in early trading on Thursday, ticking up by 0.1 per cent.

The UK was the first country to reach a trade deal with the US and is not directly affected by the court decision.

Trump's administration has already filed a notice of appeal. A White House spokesman said: "It is not for unelected judges to decide how to properly address a national emergency."

Goldman Sachs analysts said the ruling was a setback for the administration’s tariff plans and increases uncertainty but might not change the final outcome for most major US trading partners.

They noted that Trump’s team still has access to other trade weapons, such as Section 122 powers, which allow tariffs of up to 15 per cent for 150 days.

Jordan Rochester, an analyst at Mizuho Bank, said the market reaction could be short lived and said: "In ten days the Liberation day tariffs will have to be suspended.

"It sounds like good news, but Trump has various other mechanisms (Section 122, 201, 301, 338 tariffs etc) to invoke tariffs or have leverage in trade negotiations, it’s just the speed of their rollout will be weeks/months rather than immediately.

"In politics when there is a will, there is a way."

While most of the 10 per cent tariffs have been blocked, the court did not rule against the 25 per cent tariffs Trump had placed on sectors like steel and cars.

Still, economists believe the decision gives businesses breathing space.

George Lagarias, chief economist at Forvis Mazars, said: "At the very least, the ruling paves the way to dent some of the sharp economic impact of tariffs and give businesses further time to prepare."

He added: "It could also help with retail sales, reducing crisis-level consumer pessimism especially in the US.

"Assuming that an appeal does not succeed in the next few days, the main win is time to prepare, and also a cap on the breadth of tariffs – which can’t exceed 15 per cent for the time being."

Investor mood was also helped by strong earnings from Nvidia, which posted a 69 per cent rise in quarterly revenue.

Shares in the chipmaker climbed 4.9 per cent in after-hours trading.

Overall, markets welcomed the legal setback to Trump’s tariff push, but analysts were quick to stress that uncertainty remains high.