A.M. Edition for May 29. A U.S. federal trade court has ruled President Trump lacked the authority to impose global tariffs, blocking one of the administration’s boldest assertions of executive power. While stock futures are rallying today, WSJ deputy finance editor Quentin Webb says that decision adds to investor uncertainty over the future of U.S. trade policy. 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. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What did the federal court rule about Trump's tariffs?
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 US 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 US 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?
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Chapter 2: How might this ruling affect U.S. trade policy?
Well, where this ruling leaves things is we already have this extraordinary level of uncertainty there. created by tariffs and the trade war. And if anything, 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.
Chapter 3: What are the implications of the ruling for global markets?
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 US system who 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, U.S. stock futures up, pointing to kind of higher open today. And of course, strong results from NVIDIA also probably feeding into stronger sentiment for the U.S. 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.
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Chapter 4: What is Elon Musk's latest announcement regarding his government role?
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.
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Chapter 5: How is NVIDIA performing amidst U.S.-China trade tensions?
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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 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.
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