U.S. Dollar Gains Strength After Court Decision Limits Trump’s Tariff Authority

The U.S. dollar experienced a notable rise during early Thursday trading, supported by a court decision that prevents former President Donald Trump from imposing tariffs on foreign imports. This judicial development marks a significant shift in U.S. trade policy and has had an immediate impact on financial markets, particularly the foreign exchange market.

Court Decision Details:

The U.S. Court of International Trade, based in Manhattan, ruled that the U.S. Constitution grants Congress exclusive authority to regulate trade with other countries. Consequently, the president’s emergency powers cannot override this constitutional principle. The decision represents a legal setback for the Trump administration, which promptly filed an appeal, signaling the beginning of what could be a lengthy legal battle.

Market Impact:

The market reacted positively to the ruling, with the U.S. dollar gaining against a basket of major currencies. According to Reuters data, the dollar rose 0.72% against the Japanese yen to 145.86 and gained 0.63% against the Swiss franc to reach 0.8326. Meanwhile, the euro fell 0.42% to $1.1245, and the British pound declined 0.30% to $1.3432.

The U.S. Dollar Index, which measures the dollar’s performance against six major currencies, climbed back above the 100 mark for the first time in a week. However, it remains down about 8% since the start of the year.

Despite the recent rally, analysts remain cautious about the sustainability of the dollar’s strength, given the anticipated legal battle over the tariff authority. Investors are advised to adopt a cautious strategy and closely monitor legal and political developments in Washington, as these will play a crucial role in determining the stability of the dollar and broader U.S. markets.