Supreme Court Torched Trump’s Tariffs — He Raised Them Anyway
In what might be the most dramatic 24 hours in trade policy history, the Supreme Court struck down a massive chunk of President Trump’s tariff agenda on Friday — and Trump responded by making them even bigger.
The 6-3 ruling found that Trump had overstepped his authority by using the International Emergency Economic Powers Act (IEEPA) to impose tariffs, effectively torching roughly 60% of his existing trade levies. Justices Gorsuch and Barrett sided with the majority, prompting Trump to call the decision “ridiculous, poorly written, and extraordinarily anti-American.” Within hours, he slapped a 10% global tariff under Section 122 of the Trade Act of 1974 — a different legal tool that allows temporary levies for 150 days without Congressional approval. By Saturday morning, he’d already bumped it to 15%, “effective immediately.”
For investors, the whiplash is the point. Markets rallied Friday on the initial ruling, with stocks glossing over weak GDP data (Q4 came in at just 1.4% annualized) and a core inflation reading that held stubbornly at 3%. The hope? That dismantling the IEEPA tariffs could mean lower prices, potential corporate refunds, and one fewer headwind for the Fed to worry about. Estimates on what the government might owe in refunds range from $85 billion (Morgan Stanley) to a staggering $175 billion (Raymond James and a University of Pennsylvania model). That’s real money flowing back to importers — and potentially, to their shareholders.
But here’s the wrinkle nobody should ignore: the tariffs aren’t actually going away. Trump is simply rerouting them through a different legal channel. The 15% global levy is real, and the administration has signaled more “legally permissible” tariffs are coming in the months ahead. TD Cowen’s Chris Krueger expects 2026’s tariff strategy to be “all gas, some temporary brakes.”
The Fed is watching closely. Rate-cut expectations barely budged after the ruling — traders still expect two cuts this year, with July now looking more likely than June for the next move. The court decision removes one inflationary pressure, but Trump’s counterpunch adds a new one. It’s a wash, for now.
What should investors do heading into Monday? First, watch the State of the Union address on Tuesday — Trump is likely to use it as a tariff megaphone. Second, keep an eye on retail and manufacturing stocks, which RSM’s chief economist flagged as “enormous potential winners” from the refund scenario. Third, don’t assume the volatility is over. The legal battle is just shifting venues, and Trump has made it clear he’ll use every tool in the toolbox to keep tariffs alive. The only thing that’s certain is that trade policy will keep making headlines — and moving markets — for months to come.