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US trading partners ‘dazed and confused’ after tariff court loss

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The legal fight over President Donald Trump’s global tariffs is deepening after a federal appeals court ruled the levies were issued illegally under an emergency law, extending the chaos in global trade.

A 7-4 decision by a panel of judges Friday night in Washington was a major setback for Trump even as it gives both sides something to boast about. 

The majority upheld a May ruling by the Court of International Trade that the tariffs were illegal. But the judges left the levies intact while the case proceeds, as Trump had requested, and suggested that any injunction could potentially be narrowed to apply only to those who sued.

It’s unclear exactly where the case goes from here. The Trump administration could quickly appeal the ruling to the Supreme Court, or it could allow the trade court to revisit the matter and potentially narrow the injunction against his tariffs. 

“Our trading partners must be dazed and confused,” Wendy Cutler, a senior vice president at the Asia Society Policy Institute and veteran US trade negotiator, wrote in a post on LinkedIn. “Many of them entered into framework deals with us and some are still negotiating.”

Read More: Trump’s Global Tariffs Found Illegal by US Appeals Court

Trillions of dollars of global trade are embroiled in the case, which was filed by Democratic-led states and a group of small businesses. A final ruling against Trump’s tariffs would upend his trade deals and force the government to contend with demands for hundreds of billions of dollars in refunds on levies already paid.

“It’s very gratifying,” said Elana Ruffman, whose family-owned toy businesses Learning Resources Inc. won a separate lawsuit over Trump’s tariffs issued under the International Emergency Economic Powers Act, or IEEPA. “It’s great that the court agrees with us that the way these tariffs are implemented is not legal.”

Mollie Sitkowski, a trade lawyer at Faegre Drinker Biddle & Reath LLP, pointed out in a note to clients on Friday that the ruling “does not directly apply” to tariffs on Brazil or India that were issued under the emergency law and may not address the separate removal of the “de minimis” exception for packages valued under $800.

Friday’s ruling by the US Court of Appeals for the Federal Circuit held that Trump was wrong to issue tariffs under IEEPA, a federal law that the panel concluded was never intended to be used in such a manner. Indeed, the court noted that the law doesn’t mention tariffs “or any of its synonyms.”

“Once again, a court has ruled that the president cannot invent a fake economic emergency to justify billions of dollars in tariffs,” New York Attorney General Letitia James, who is a party to the tariff lawsuit, said in a statement. “These tariffs are a tax on Americans — they raise costs for working families and businesses throughout our country, causing more inflation and job losses.”

Read More: Trump’s Revenge Summer Heats Up With Fed Ouster, Bolton Raid

The ruling applies to Trump’s “Liberation Day” global tariffs that set a 10% baseline and have been in effect for months that the administration says are meant to address a national emergency around US trade deficits. It affects the extra levies on Mexico, China and Canada that Trump said were justified by the ongoing fentanyl crisis in the US, which he also said was a national emergency under IEEPA.

The decision also covers Trump’s so-called reciprocal tariffs that took effect Aug. 7 for dozens of nations that failed to reach trade deals with the administration by Aug. 1. Various carve-outs and extensions have been announced since then, leaving the final tariffs for some nations up in the air.

Trump’s tariffs were first ruled illegal in May by the US trade court in Manhattan. That decision was put on hold by the Federal Circuit for the appeal, allowing the administration to continue threatening tariffs during the negotiations

Hours before Friday’s ruling dropped, Trump cabinet officials told the appeals court that a striking down the president’s tariffs would seriously harm US foreign policy, with Treasury Secretary Scott Bessent saying it would lead to “dangerous diplomatic embarrassment” and undermine trade talks. On Friday night after the court move, Trump posted on X that if the tariffs went away, “it would be a total disaster for the Country.”

Cutler, who spent nearly three decades as a diplomat and negotiator at the Office of the US Trade Representative, suggested that the administration’s concerns about trade deals may now be a reality. She wrote in her post that India, hit by a 50% tariff, “must be rejoicing,” while China “must be weighing its stance in making concessions in ongoing talks.”

“EU efforts to secure domestic approval of its deal may be called into question, while Japan and Korea whom apparently have made oral deals with little in writing may choose to slow walk current efforts until there is more US legal clarity, while still pressing for lower auto tariffs,” Cutler said.

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Treasury Secretary Bessent insists Trump’s tariff agenda is ‘permanent,’ saying the White House can recreate it even with a Supreme Court loss

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The Supreme Court is in the process of deciding the fate of President Trump’s tariffs, but even if the administration loses, it might not matter, said Treasury Secretary Scott Bessent.

At issue is the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to justify some of its tariffs, including its baseline 10% duty on almost all nations. IEEPA, passed by Congress in 1977, gives the President “broad authority” on economic issues like tariffs after declaring a “national emergency,” for which the White House has pointed to elevated fentanyl imports from abroad.

Although not guaranteed, it’s possible the Supreme Court will decide the fentanyl crisis can’t be used as an emergency to justify broad tariffs on U.S. trading partners, which would make many of the administration’s tariffs invalid. In that case, the White House will just pivot to another justification to make tariffs permanent, said Bessent during the New York Times DealBook Summit this week. 

“We can recreate the exact tariff structure with 301’s, with 232’s, with the, I think they’re called 122’s,” he said, referring to several sections of various trade acts that could serve as alternatives to the administration’s current justification for its tariffs.

When interviewer and DealBook editor Andrew Ross Sorkin questioned whether these measures could exist permanently, Bessent replied “permanently.” He later clarified that tariffs under Section 122 of the Trade Act of 1974 would not be permanent.

In sum, the Constitution gives Congress purview over tariffs, but over the years it has given the executive branch more leeway to levy them through the trade acts mentioned by Bessent. 

Each of the sections Trump’s team may consider comes with its own set of pros and cons. Section 122 would be the quickest method to restore tariffs in the case of a Supreme Court loss because it doesn’t require an investigation on a trading partners’ practices. Using this justification would let the government levy tariffs up to 15%, with certain limits, but only for 150 days before congressional action is required.

The other two sections, as Bessent pointed out, have no time limit or limit on the tariff rate that can be levied, although they have other caveats. To justify tariffs under Section 301 of the Trade Act of 1974, the administration would need to conduct an investigation into practices by its trading partners it sees as “unjustifiable” or “unreasonable.” Trump did this successfully during his first administration to justify tariffs on China in 2017.

Alternatively, the administration could turn to Section 232 of the Trade of the Trade Expansion Act of 1962 and try to justify tariffs as an issue of national security. The White House is already using this justification to underpin its tariffs on steel, aluminum, and autos and those are not being scrutinized by the Supreme Court. 

Finally, experts have previously told Fortune, Trump could also ask Congress to pass a bill giving the president explicit authority to levy tariffs. Although it would require some caveats in terms of scope, and possibly duration of the tariffs, it would likely receive bipartisan support, international trade law expert and University of Kansas Law School professor Raj Bhala told Fortune

Despite the options in the administration’s back pocket, Bessent said he was optimistic about the White House’s chances at the Supreme Court. 

He also said a loss in court would be “a loss for the American people,” and pointed to the fact that China agreed to tighten control over exports of precursor chemicals used to make fentanyl earlier this year—a decision which he attributes to pressure created by the administration’s tariffs.

“I have been very consistent on this, that tariffs are a shrinking ice cube. The ultimate goal is to rebalance trade and to bring back domestic production,” Bessent said.



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Before running the world’s most valuable company, Jensen Huang was a 9-year-old janitor in Kentucky

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The CEO of the world’s most valuable company didn’t learn about America through elite universities or tech incubators. His education started in a rural Kentucky boarding school where the students smoked, carried knives, and the youngest student on campus, at 9 years old, was assigned to clean the toilets.

That student was Jensen Huang.

In a recent podcast appearance with Joe Rogan, the Nvidia CEO traced that improbable starting point back to his parents, who had sent him and his brother to the United States in the mid-1970s with almost nothing. The family had been living in Bangkok during one of Thailand’s periodic coups, and his parents decided it was no longer safe to keep the children there. They contacted an uncle they had never visited in Tacoma, Wash., and asked him to find a school in America that would accept two foreign boys with almost no savings.

He found one: Oneida Baptist Institute in Clay County, Ken., one of the poorest counties in the country then and now. The dorms had no closet doors, no locks, and a population of kids who smoked constantly–Huang said he also tried smoking for a week, at 9 —and settled disputes with knives. Huang’s roommate was a 17-year-old wrapped in tape from a recent fight; the “toughest kid in school,” he said. Every student had a job. His brother, was sent to the tobacco fields the school ran to fund the school—“kind of like a penitentiary”—while Huang became the janitor, cleaning the bathrooms for a hundred teenaged boys (“I just wished they would be a bit more careful” in the bathroom, he joked.)

That indefatigable cheerfulness, even when describing scenes that sound brutal to almost anyone else, ran through the entire interview. 

Huang said most of his memories from that period were good, and remembers the time he told his parents his amazement after eating at a restaurant: “Mom and dad, we went to the most amazing restaurant today. This whole place is lit up. It’s like the future. And the food comes in a box and the food is incredible. The hamburger is incredible.”

“It was McDonald’s,” Huang laughed. 

Indeed, these memories were relayed to his parents late; the boys were navigating all of this alone. International phone calls were too expensive, so his parents bought them a cheap tape deck. Once a month, they recorded an audio letter describing their lives in coal country and mailed it back to Bangkok. Their parents taped over the same cassette and mailed it back.

Two years later, Huang’s parents finally made it to America, with just suitcases and only a bit of money. His mother worked as a maid. His father, a trained engineer, looked for work by circling openings in the newspaper classifieds and calling whoever picked up. He eventually found a job at a consulting engineering firm designing factories and refineries.

“They left everything behind,” Huang said. “They started over in their late thirties.”

He still carries one memory from those early years that he said “breaks my heart.” Not long after his parents arrived in the U.S., the family was living in a rented, furnished apartment when he and his brother accidentally broke a flimsy particle-board coffee table. 

“I just still remember the look on my mom’s face,” he said. “They didn’t have any money, and she didn’t know how she was going to pay it back.”

For Huang, moments like that define the stakes his parents accepted when they came to the U.S. “with almost no money”.

“My parents are incredible,” he said. “It’s hard not to love this country. It’s hard not to be romantic about this country.”

Jensen Huang’s humble beginnings inspired Nvidia principles

That way of seeing America—as a place where people will give you a chance if you’re willing to take one—is how Huang explains Nvidia’s early, unlikely bets. 

Huang came up with the idea for Nvidia while sitting in a booth at a Denny’s, where he had worked first as a dishwasher and then a busboy. He wanted to build a chip that could power 3D graphics on a personal computer, and it was at that Denny’s booth that he met two friends to sketch out what would become the company.

Long before the company became synonymous with the AI boom, Huang kept steering it toward ideas that few people understood and even fewer believed in. CUDA was one of them. When Nvidia introduced it in 2006, the cost of the chip roughly doubled, revenue did not move, and the company’s valuation fell from about $12 billion to between $2 and $3 billion.

“When I launched CUDA, the audience was complete silence,” he said. “Nobody wanted it. Nobody asked for it. Nobody understood it.”

CUDA is the software layer that turns the graphics chips into general purpose compute engines, making them capable of large neural networks. Now, of course, nearly every major AI model today runs on hardware that depends on CUDA. 

The same thing happened when he introduced Nvidia’s first AI supercomputer, the DGX1. The launch drew “complete silence,” he said, and there were no purchase orders. The only person who reached out was none other than Tesla CEO Elon Musk, who told him he had “a nonprofit AI lab” that needed a system like this.

Huang assumed that meant the deal was impossible.

“All the blood drained out of my face,” he told Rogan. “A nonprofit is not buying a $300,000 computer.”

But Musk, the world’s richest man, insisted. So Huang boxed up one of the first units, loaded it into his car, and drove it to San Francisco himself.

In 2016, he walked into a small upstairs room filled with researchers— Berkeley robotics pioneer Pieter Abbeel, OpenAI cofounder Ilya Sutskever, and others—working in a cramped little office. That room turned out to be OpenAI, long before it became the most discussed AI organization in the world. Huang left the DGX1 with them and drove home.

Looking back, even as the CEO of a $4.5 trillion company who now draws crowds and autograph-seekers wherever he goes, he doesn’t describe any of this as foresight or heroism. To him, it’s simply the continuation of the risks his parents took when they sent two boys across the world with almost nothing.

“We really believed it, and so if you believe in that future, and you don’t do anything about it you’re going to regret it for your life,” Huang said.



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Nintendo’s 98% staff retention rate means the average employee has been there 15 years

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Good morning. When experienced employees leave–whether they get laid off, or jump ship for a better opportunity–they take their years, if not decades, of experience with them. Over time, the company loses that institutional knowledge.

Nintendo, the Japanese video game giant, is an example. Its Japanese employees spend an average of 15 years at the company, which boasts a yearly retention rate of 98%. That’s not just better than the layoff-prone video game industry, it’s better than most of Japan. The average Japanese worker spends 11 years at their company; in the U.S., that number is closer to four.

“The people who first made Nintendo’s hits are still working at the company,” Keza MacDonald, the author of Super Nintendo, a forthcoming book about the developer, told me recently. “For the last 50 years, these people have been passing down knowledge and training up a new generation of Nintendo creatives.” 

Both Nintendo’s business and creative leaders have long tenures at the company. Current president Shuntaro Furakawa joined the company in 1994 as an accountant. Shigeru Miyamoto, the brains behind franchises like “Super Mario” and “The Legend of Zelda,” joined as a staff artist in 1977. 

There is a risk that companies that rely too much on institutional knowledge get stuck in their ways. Yet Nintendo, according to MacDonald, has combined institutional knowledge with fresh ideas to continuously replenish its pipeline of fun games: “It’s not like the oldest guy gets to decide what’s a good idea and what isn’t. Everyone puts ideas in.”

Nintendo has its share of flops, failed experiments, and puzzling business decisions–as does every firm. Yet the company maintains its share of the highly competitive video game industry against bigger, deeper-pocketed rivals like Sony and Microsoft

The few designers who’ve left Nintendo still have fond feelings about their time there. As Lee Schuneman, a former Nintendo game designer and now Efekta Education Group’s chief product officer, told our Brainstorm Design audience this week, “I got to work with some of the most talented game designers in the world, including people like [Shigeru Miyamoto] at Nintendo, and [learn] a whole range of lessons about how to make playful experiences.”

That goodwill may be the result of Nintendo avoiding the industry’s boom-bust churn and valuing the expertise its workforce accumulates.

Nintendo “is still, to this day, making games differently from everyone else,” MacDonald says. You can check out the rest of our mainstage sessions from Brainstorm Design here.—Nicholas Gordon

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Netflix to acquire Warner Bros. Discovery studios 

The online streamer and the maker of the  Superman and Harry Potter franchises are expected to announce a sale of Warner’s studios and HBO Max business to Netflix, the WSJ reports. Paramount Skydance chief David Ellison lobbied the White House against the deal even though Netflix offered a richer valuation, according to the New York Post.

“China’s Nvidia” stages IPO

Moore Threads, a maker of GPUs based in Beijing went public today at a valuation of $1.1 billion and its stock rose by 400% on day one.

$10 billion a week on U.S. national debt

The calendar year may have a few weeks left to tick off, but as far as the government’s budget is concerned, we’re in fiscal 2026. The Treasury has already paid out a 12-figure sum to service the nation’s debt. Unlike the tax and calendar year, the government’s financial calendar runs to the end of September. According to Treasury data, in the nine weeks since, it has spent $104 billion in interest on its $38 trillion borrowing burden. That’s more than $11 billion a week, and already represents 15% of federal spending in the current fiscal year.

Poor labor data may have locked in Fed cut

Analysts may not have necessarily digested this week’s lackluster labor data with glee—but it sure didn’t dampen their spirits either. Wall Street is hoping for a Christmas miracle with a final interest rate cut from the Fed, bringing the base rate down to 3.5% to 3.75%, and recent jobs reports may just have sealed the deal.

U.S. lobbied against E.U. seizing Russian money

American officials urged Europe not to use frozen Russian assets as the basis of loans that would fund Ukraine’s defense against Moscow’s invasion of its Eastern flank. The funds could be used as an incentive to end the war, Washington argued.

January 6 pipe bomb suspect arrested

Brian Cole Jr., 30 of Woodbridge, Virginia, was the subject of a five-year-long investigation by federal officials

Wall Street forecasts S&P will hit 7,500

Analysts are publishing their notoriously unreliable annual stock market forecasts and this year nine investment banks are guessing that the market will rise about 10% in 2026.

The markets

S&P 500 futures were up 0.17%  this morning. The last session closed up 0.11%. STOXX Europe 600 was up 0.18% in early trading. The U.K.’s FTSE 100 was up 0.19% in early trading. Japan’s Nikkei 225 was down 1.05%. China’s CSI 300 was up 0.84%. The South Korea KOSPI was up 1.78%. India’s NIFTY 50 is up 0.55%. Bitcoin fell to $91.4K.

Around the watercooler

How a Texas gas producer plans to exploit the ‘mega trend’ of power plants for AI hyperscalers by Jordan Blum.

Battle for sports betting market heats up as Polymarket announces return to the U.S. by Carlos Garcia.

Nvidia CEO Jensen Huang admits he works 7 days a week, including holidays, in a constant ‘state of anxiety’ out of fear of going bankrupt by Jessica Coacci.

Kim Kardashian shaped Skims into a $5 billion brand—now she wants to help other entrepreneurs mold their skills for success by Emma Hinchliffe.

CEO Daily was compiled and edited by Jim Edwards and Lee Clifford.



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