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Most Trump tariffs ruled illegal by appeals court

The United States Court of Appeals for the Federal Circuit, which handles appeals for the Court of International Trade, has ruled against President Trump and his administration on tariffs levied against other countries.

The president’s tariffs were launched under the International Emergency Economic Powers Act, but the courts majority was in agreement with the lower court that the act does not in fact give the president the authority to implement the tariffs in the manner that he did.

However, the court permitted the tariffs to stay in place until mid-October, allowing for a request for an appeal to reach the Supreme Court.

“We agree that IEEPA’s grant of presidential authority to regulate imports does not authorize the tariffs imposed by the Executive Orders, we affirm,” the court wrote in a 7-4 decision.

Tariffs have been a major narrative driving markets over the past several months, and the decision is a legal blow to a signature element of the president’s economic policy.

The tariffs rejected by the ruling include the 10% charge placed on imports from almost all countries, as well as additional tariffs imposed on countries the president deemed to have unfair trade restrictions, and charges put in place on goods imported from Canada, China, and Mexico.

The president’s tariffs were launched under the International Emergency Economic Powers Act, but the courts majority was in agreement with the lower court that the act does not in fact give the president the authority to implement the tariffs in the manner that he did.

However, the court permitted the tariffs to stay in place until mid-October, allowing for a request for an appeal to reach the Supreme Court.

“We agree that IEEPA’s grant of presidential authority to regulate imports does not authorize the tariffs imposed by the Executive Orders, we affirm,” the court wrote in a 7-4 decision.

Tariffs have been a major narrative driving markets over the past several months, and the decision is a legal blow to a signature element of the president’s economic policy.

The tariffs rejected by the ruling include the 10% charge placed on imports from almost all countries, as well as additional tariffs imposed on countries the president deemed to have unfair trade restrictions, and charges put in place on goods imported from Canada, China, and Mexico.

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Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemons geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected halo effect across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemons valuation has already been steadily compressing for years. While it was once one of retails richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi ONeill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brands growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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