SPECIAL MARKET BRIEFING: A Historic Supreme Court Ruling on Tariffs: What It Means for Markets

On Friday, the U.S. Supreme Court issued a landmark decision striking down the Administration’s April 2, 2025 tariff policy. In a 6–3 ruling, the Court held that the President exceeded constitutional authority by using the International Emergency Economic Powers Act (IEEPA) to unilaterally impose sweeping tariffs without Congressional approval.

Importantly, the Court did not rule on whether tariffs themselves are an appropriate tool for regulating commerce. Rather, it ruled on process – specifically, whether Congress had delegated sole authority to the President to set broad-based tariffs under IEEPA. The answer, according to the majority, was no.

Initial market reaction was modest: U.S. equities and Treasury yields moved slightly higher, and the dollar softened. That response reflects what we often see in markets where clarity tends to reduce risk premiums, but policy uncertainty rarely disappears overnight. So what happens next, and how should investors think about it?

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The Near-Term Market Impact: Relief, With Caveats

In the short run, markets may interpret the decision as constructive. There is potential for a “relief rally,” particularly if investors begin to price in the prospect of tariff refunds.

IEEPA tariffs accounted for more than half of total tariff revenues, with receipts totaling approximately $133 billion through December. Some estimates suggest the Administration could ultimately face more than $150 billion in refunds. If returned to corporations and consumers over time – whether via direct payments, credits, or offsets – those funds could act as a modest fiscal stimulus heading into 2026.

That said, the refund process is likely to be complex and drawn out. The Court will be careful to avoid triggering a fiscal shock, and implementation could involve phased credits, claims processes, or delayed adjustments rather than immediate payments. In other words, relief may come but not quickly or cleanly.

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Policy Uncertainty Is Not Going Away

While this decision invalidates tariffs enacted under IEEPA, it does not eliminate the Administration’s ability to pursue tariffs through other statutory avenues. The White House is expected to move quickly under:

• Section 122 of the Trade Act of 1974, which allows tariffs up to 15% for 150 days in response to balance of payments concerns.
• Section 301, which provides broad discretion to impose tariffs in response to unfair trade practices, subject to investigation and procedural requirements.
• Potential additional action under Section 232, and even the rarely used Section 338, which has not been invoked since the 1940s.

In short, tariff policy may change form, but it is unlikely to disappear. For markets, this means uncertainty will persist and with it, the possibility that investors begin to price in structurally higher inflation and interest rates over time if trade frictions remain elevated.

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Offsets to Consider

There are several important counterweights investors should keep in mind:

• First, fiscal policy. The “One Big Beautiful Bill Act” (OBBBA) and associated tax provisions slated for 2026 could provide meaningful support to consumers and corporations, potentially offsetting inflationary pressures from renewed tariffs.
• Second, corporate fundamentals remain strong. Consensus expectations call for mid-teens S&P 500 earnings growth in 2026 and projections that were largely unchanged regardless of how the Court ruled. Earnings, ultimately, drive long-term equity returns far more than policy headlines.
• Third, monetary conditions remain generally accommodative. The 175 basis points of rate cuts already implemented continue to support economic activity. While uncertainty remains around the Federal Reserve’s 2026 trajectory, particularly with a new Chair expected in May, financial conditions today are not restrictive.

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Implications for Trading Partners

In the interim, certain countries could see temporary advantages. If replacement tariffs under Section 122 are capped at 15%, nations that had faced higher IEEPA rates (such as India or Switzerland) could benefit in the short term. Smaller trading partners may also gain relative positioning depending on how procedural constraints under Section 301 unfold. However, existing trade deals and tariffs enacted under other authorities are not materially affected by this ruling.

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The Bigger Picture

Markets do not move based on a single variable. They respond to a complex interaction of fiscal policy, monetary conditions, corporate earnings, global growth, and investor sentiment.

This ruling removes one layer of legal uncertainty but introduces another phase of policy maneuvering. It may modestly support growth if refunds materialize. It may reintroduce inflation concerns if tariffs are restructured. It may create relative winners and losers across sectors and geographies. But it does not alter the fundamental drivers of long-term returns.

At GatePass, our approach remains consistent: patience, discipline, and diversification. Policy headlines will continue to generate volatility. Structural earnings growth, thoughtful asset allocation, and risk management remain the more durable sources of compounding capital. As always, we will continue monitoring developments and positioning portfolios with a multivariate lens.

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