The Supreme Court Killed Tariffs and Left a $175 Billion Mess
On Friday, the Supreme Court did something Wall Street had been anticipating for months — it struck down President Trump’s sweeping IEEPA tariffs in a decisive 6-3 ruling, declaring the president had overstepped his emergency powers. Markets popped immediately. The S&P 500 climbed 0.7%, the Nasdaq surged 0.9% to snap a brutal five-week losing streak, and for a brief moment, the trade war felt like it was actually over.
It wasn’t. Before the ink was dry on the ruling, the White House announced a fresh 10% tariff under the Trade Act of 1974 — a completely different legal authority the Court didn’t touch. Over the weekend, reports surfaced that the administration is already mulling an increase from 10% to 15%. Futures opened lower Monday, with the S&P 500 sliding about 0.5%, reminding everyone that tariff whiplash remains the defining feature of this market cycle.
But here’s where it gets interesting for traders. The ruling triggered a massive refund question that nobody on Wall Street can agree on. Morgan Stanley pegs the potential refund at roughly $85 billion. RSM’s chief economist says $100 to $130 billion. Raymond James went all the way to $175 billion, matching a University of Pennsylvania model. That’s real money flowing back to importers — and retailers in particular. The National Retail Federation is already calling it an “economic boost,” urging the lower courts to expedite refunds so companies can “reinvest in their operations, their employees, and their customers.” Justice Kavanaugh, though, offered a more candid assessment of the refund process: a “mess.”
The timing of this ruling couldn’t be more relevant for the week ahead. Home Depot reports earnings Tuesday, followed by Lowe’s and TJX on Wednesday. These are exactly the tariff-sensitive retail names that stand to benefit most from potential refunds and the removal of IEEPA duties. Analysts at RSM flagged “enormous potential winners” in the retail and manufacturing sectors. The question for each of these earnings calls will be straightforward: how much did tariffs actually cost you, and what’s the refund math look like?
Meanwhile, the macro backdrop is complicated. The PCE inflation report that dropped Friday showed core prices running at a 3% annual rate — hotter than expected and well above the Fed’s 2% target. Q4 GDP came in at a sluggish 1.4%, though the longest government shutdown in history deserves most of the blame there. The Fed is now expected to hold rates steady until at least July, with markets pricing in two cuts for 2026 and roughly 40% odds of a third. Losing the IEEPA tariffs removes about half a percentage point of inflationary pressure, according to central bank estimates — a modest tailwind, but not the game-changer bulls were hoping for.
The bottom line: tariffs got killed by the Supreme Court and immediately came back as a zombie under different legal authority. The refund bonanza could be enormous — or could get tied up in courts for years. Retail earnings this week will be the first real-time test of who benefits and who’s still stuck paying import taxes. Keep your eyes on those calls. The market just entered a new chapter of trade policy uncertainty, and the winners are the companies that hedged smartly and the traders who stay nimble.