The US Supreme Court is set to rule on the administration’s use of the International Emergency Economic Powers Act (IEEPA) for tariffs, which could hit about 70% of tariff revenue. It is expected that a ruling will be delivered today, delayed from Friday.
It’s thought the Supreme Court is leaning towards rejecting Trump’s use of the act to impose tariffs, the central plank of his economic policy, which is likely to lead to near-term uncertainty in financial markets over trade as well as economic and fiscal policy. However, the delay from Friday could indicate this is a much tighter decision than previously thought and it could be that the delay indicates justices are leaning closer to backing the administration. Market odds indicate a roughly one in four chance that SCOTUS backs the president.
There could be some headline risk around the announcement either way, with impacts on Treasuries, USD, gold and equity markets.
If the justices overturn the tariffs we would expect some disruption in the event of repayments, delays and ongoing uncertainty about individual country/sector tariffs. On balance, it seems uncertainty over trade policy and further use of tariffs creates a headwind for risk assets and a further tailwind to gold. The administration would need to swing behind more targeted tariffs that could create additional uncertainty around trade policy, a fresh potential for countermeasures from other countries, and increase volatility.
Refunds may be a positive for some companies, but may not have a massive impact on the economy – ~$135bn perhaps is not an enormous amount for a $30tn economy. For scale, the US budget deficit for the first three months of fiscal 2026, which started in October, was $602 billion.
Make no mistake; tariffs are not going away, even if the justices slap them down. Trump has other levers to pull. Sections 301 and 232 can be used more prominently to impose sectoral tariffs relating to unfair trade practices and national security issues, respectively. The drawback to these is that they require lengthy investigations to be carried out first, which can take months.
Other tools are as yet unused. Section 122, for example, doesn’t require lengthy investigations and could be applied almost immediately. But it has a 15% cap on the level of tariffs and a 150-day time limit, which can be extended with Congressional approval – which could be tricky after the Mid-term elections in November. This is likely implemented immediately should SCOTUS slap down IEEPA tariffs. Another is Section 338, which allows for tariffs of up to 50% based on discrimination against US commerce, but it’s not been tested recently.
