Experts and Analysts' Comments: Supreme Court Tariff Ruling Triggers Market Reaction

Investing.com - The U.S. Supreme Court issued a highly anticipated ruling on Friday, ruling that President Trump lacked the authority under the Emergency Powers Act to implement comprehensive retaliatory tariffs last year.

The Supreme Court, in a 6-3 decision, found that Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) of 1977 to impose tariffs was unauthorized.

Find more insights on market dynamics and news on InvestingPro

Following the ruling, Trump criticized the Supreme Court, calling it “deeply disappointed” and a “national disgrace,” and suggested that the court was “influenced by foreign interests.” The president stated that tariffs would remain in effect under other regulations, while also imposing a new 10% global tariff.

Given that U.S. importers pay billions of dollars in tariffs each month, the Supreme Court’s decision is significant. The court did not comment on whether the government must refund tariffs already collected.

Wall Street rose after the Supreme Court ruling. Here are some popular ETFs tracking the benchmark S&P 500 index: SPDR® S&P 500® ETF Trust (NYSE:SPY), Vanguard S&P 500 ETF (NYSE:VOO), and iShares Core S&P 500 ETF (NYSE:IVV).

Here are reactions from various parties to the Supreme Court decision:

JPMorgan Chief U.S. Economist Michael Feroli:

"Given statements from government officials, a reasonable baseline is that the government will use various legal powers to keep the effective average tariff rate faced by U.S. importers unchanged.

That said, even this outcome will lead to significant adjustments in tariffs imposed on different products from different countries, creating winners and losers. It also means a substantial increase in trade policy uncertainty, adding new headwinds to capital expenditure.

While the U.S. economy has performed noticeably better than expected since liberation day, last year’s contraction in non-tech capital spending is a very rare phenomenon during non-recession periods."

Emarketer Chief Analyst Zak Stambor:

"The Supreme Court ruling that President Trump lacked emergency powers to implement many of his tariffs removes one arrow from the government’s quiver but does not disarm it. While this decision provides some recent relief, it does not eliminate the broader trade policy uncertainty faced by retailers and brands.

We expect this ruling to create a mild tailwind for retail sales starting this year, although this benefit will gradually fade before 2028. We now forecast retail sales will grow 3.5% this year to $7.78 trillion, about $13 billion higher than our previous estimate.

While the apparent lift may seem modest, the gains could be concentrated in import-intensive discretionary categories, where pricing pressures are most severe. We anticipate more pronounced increases in computers and consumer electronics, apparel and footwear, and furniture and home goods."

GDS Wealth Management Chief Investment Officer Glen Smith:

"The Supreme Court’s rejection of President Trump’s tariffs removes a significant source of uncertainty and friction from the market, just 10 months after the market experienced its fastest correction since March 2020 due to tariff concerns.

This is likely the catalyst needed for the stock market to break out of its narrow trading range since 2026. Although the market has not responded meaningfully to tariff news for several months, the Supreme Court’s decision has been a key uncertainty for the stock market since liberation day last April, and that uncertainty is now gone.

We will not change our investment portfolios because of the Supreme Court’s rejection of tariffs, but it serves as an important reminder of how the stock market and markets in general adapt and adjust over time to new normal conditions."

PIMCO Former CEO Mohamed El-Erian:

"Who owes whom?

The question of how the Supreme Court’s ruling on IEEPA will impact the potential $133 billion in tariff refunds is actively debated in many places and will soon be argued in court.

There are also many questions about how the tariff system will evolve, as the government is seeking at least three alternative legal avenues. Even if overall tariffs remain unchanged by the end of the year, as Treasury Secretary Biesent suggests, the impact on companies and sectors could vary greatly."

Gina Bolvin, President of Bolvin Wealth Management Group:

"The market’s reaction to the Supreme Court’s ruling on tariffs from the Trump era has been subdued, indicating that it has largely been digested. Since IEEPA tariffs account for about 60% of the tariffs collected, the economic impact of this decision is limited. Retail stocks are benefiting from expectations of reduced cost pressures.

The ruling also supports inflation expectations and, as tariff-related resistance eases, increases the likelihood of rate cuts—both positive for businesses and consumers."

LPL Financial Chief Equity Strategist Jeff Buchbinder:

“We will downplay the short-term rebound from the Supreme Court ruling because the Trump administration will quickly turn to different legal grounds to implement alternative tariffs, and the deficit will rise during this period. However, if lower tariffs help cool inflation, it could reinforce expectations of a Fed rate cut later this year.”

Jamie Cox, Managing Partner of Harris Financial Group:

“The Supreme Court’s decision will pave the way for accelerated rate cuts, as the inflation expectations driven by tariffs are no longer a significant factor. The unresolved question is what new powers the government will use to salvage some of the tariff revenue.”

This article was translated with the assistance of artificial intelligence. For more information, see our Terms of Use.