Supreme Court Seen Likely to Strike Down Trump’s Global Tariffs

The U.S. Supreme Court appears poised to strike down former President Donald Trump’s sweeping global tariff plan, with analysts assigning as much as an 80% probability that the justices will rule against it. The case, which challenges the limits of presidential authority on trade, could reshape global commerce and reverberate across equity, currency, and commodity markets. For traders, the S&P 500 (Zorrox: SPX500.) has become the key barometer of sentiment as markets brace for the decision.

Legal Grounds and Judicial Signals

At the center of the case is whether a president can impose blanket tariffs without explicit congressional approval. Trump’s team cited the International Emergency Economic Powers Act (IEEPA) to justify the move — a law traditionally used to freeze assets and restrict transactions in national security emergencies, not to overhaul trade policy.

Legal scholars widely view that justification as overreach. The Court’s conservative majority has recently limited executive authority in several high-profile cases, suggesting a similar outcome here. Under the “major questions doctrine,” the Court has insisted that major economic actions require clear legislative authorization — a standard that Trump’s global tariff plan, covering nearly all imports, almost certainly fails to meet.

A ruling against Trump would restore Congress’s central role in setting trade policy and curb future presidents from invoking emergency powers to manage global commerce unilaterally.

Political and Economic Stakes

The implications extend far beyond the courtroom. Trump’s proposed 10% global import tariff and 60% levy on Chinese goods had raised concerns about renewed inflation and global retaliation. If struck down, those fears would likely subside, giving businesses and markets greater clarity.

Business coalitions have warned that the tariffs could raise costs for manufacturers and consumers alike. Economists estimate that if implemented, the plan could have added roughly half a percentage point to U.S. inflation while shaving up to 1% off GDP growth over the following year.

For Washington, the case reopens the long-standing debate over separation of powers. Congress has historically defended its authority over trade matters, and a Supreme Court ruling reaffirming that principle would reinforce institutional boundaries ahead of a contentious election cycle.

Market Reactions and Forward Scenarios

Markets are already positioning for an outcome that limits executive power. Equities tied to global supply chains — manufacturing, shipping, and retail — have rallied in anticipation of a reversal. The dollar has softened, reflecting expectations that easing tariff risk could temper inflation and reduce pressure on the Federal Reserve to keep policy tight.

A ruling against Trump would likely lift import-sensitive sectors such as consumer goods, autos, and electronics, while exporters to the U.S., particularly in Asia and Latin America, could see renewed momentum. If the Court surprises and upholds the tariffs, however, equities could sell off sharply on inflation fears, with Treasury yields climbing as traders reprice growth and policy risk.

Diplomatic implications are also on the table. Key trading partners have warned that broad U.S. tariffs would provoke retaliation and fracture post-pandemic trade normalization. A ruling that invalidates the policy would ease those tensions and strengthen multilateral frameworks that have been under strain since 2018.

What Traders Should Watch

Market sensitivity will hinge on the ruling’s scope and tone. A narrowly written opinion curbing executive discretion might prompt a mild relief rally, while a sweeping rebuke of the entire tariff structure could unleash a broader risk-on move across global assets.

Traders will also watch for any parallel actions from the White House or Congress. Lawmakers could attempt to codify tariff powers or propose new trade legislation in response, potentially shaping the next phase of U.S. trade strategy.

The decision’s timing could influence inflation expectations into year-end. A market-friendly outcome might ease import costs and supply chain pressures, while an unexpected Trump victory could reignite fears of renewed price shocks.

Tips for Traders

• The S&P 500 (Zorrox: SPX500.) remains the best proxy for equity sentiment tied to the ruling.

• Focus on manufacturing, retail, and import-heavy names poised to benefit from tariff relief.

• Track movements in the U.S. dollar and Treasury yields for clues on inflation repricing.

• Consider volatility strategies using options ahead of the decision window.

• Watch for sector rotation into exporters and emerging markets on a market-friendly ruling.

• Stay nimble: even a narrow ruling could trigger multi-asset repricing depending on tone and scope.