The US Supreme Court ruled on Wednesday that Donald Trump exceeded his authority in imposing sweeping global tariffs under emergency powers, prompting a rally in stock markets on both sides of the Atlantic.
The Dow Jones industrial average rose 138 points, or 0.3%, to 49,533, while the S&P 500 gained 0.5% to 6,896. In London, the FTSE 100 closed 59 points higher, or 0.56%, at 10,686, after hitting an intraday record of 10,745 shortly after the ruling. US Treasury yields edged up as bond prices weakened.
The ruling applies to tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Michael Brown, senior research strategist at Pepperstone, said these tariffs accounted for roughly half of the increase in the average effective tariff rate since President Trump returned to office, including reciprocal levies and measures on China, Canada and Mexico. However, he noted that the administration could use at least five other sections of US commerce law to re-impose similar measures.
Lizzy Galbraith, senior political economist at Aberdeen Investments, said IEEPA tariffs represented almost seven percentage points of the 11% implemented US weighted average tariff rate, meaning tariffs would decline substantially in the near term. She predicted a period of heightened uncertainty as the administration seeks to rebuild its tariff wall through alternative legal routes.
In the UK, a record budget surplus of £30.4bn and the biggest monthly rise in retail sales since 2024 added to the brighter economic picture. Diageo, which had been hurt by tariffs on its whisky and tequila, was the top riser on the FTSE 100, up 3.9%, while European carmakers also advanced.
