(UNITED STATES) — The U.S. Supreme Court struck down sweeping presidential tariffs on Friday, ruling 6-3 that President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose global levies was unlawful.
The Court held that IEEPA “does not authorize the President to impose tariffs,” a decision investors read as a sharp constraint on unilateral tariff power and a near-term reduction in trade uncertainty.
U.S. stocks rose after the ruling, with broad gains across major indexes as markets treated the decision as a clearer baseline for trade policy and corporate planning.
Chief Justice John Roberts anchored the majority’s reasoning in Congress’s taxing authority, writing: “When Congress grants the power to impose tariffs, it does so clearly and with careful constraints. It did neither in IEEPA.”
Friday’s decision immediately reshaped expectations for how quickly a president can impose broad-based duties under emergency powers, a mechanism that had amplified the risk of sudden policy shifts for multinational companies and supply chains.
Markets have long treated tariffs as economic friction that can raise costs, disrupt sourcing, and cloud earnings forecasts, especially for firms that rely on cross-border inputs and overseas demand.
In its practical effect, the ruling placed congressional authorization at the center of any renewed push for sweeping tariffs, even as it left room for narrower actions under other laws.
Roberts’s opinion signaled that the Court did not view IEEPA as a tariff statute, tightening the legal boundaries around how presidents can move quickly on trade using emergency declarations.
Justices Clarence Thomas, Samuel Alito, and Brett Kavanaugh dissented, warning that the majority’s approach risked operational complications for the government and private parties that had relied on the tariff regime.
Kavanaugh wrote that the tariffs were “clearly lawful” under text, history, and precedent, while adding that refund processes could be a “mess.”
The decision also set a pathway for what comes next. The Court directed challenges to the U.S. Court of International Trade (CIT) for disputes, including potential refunds administered by U.S. Customs and Border Protection (CBP).
Investors interpreted that routing as a sign the next phase could shift from headline trade moves to claims, documentation, and litigation timelines, even as the ruling reduced the likelihood of sudden, sweeping tariff announcements under IEEPA.
The immediate market response reflected that repricing. The Dow Jones Industrial Average rose 0.3% (128 points), the S&P 500 gained 0.4%, and the Nasdaq Composite advanced 0.5%.
Traders described the move as a relief rally driven by reduced trade uncertainty, even as the session faced countervailing pressures that included AI fears and oil risks.
Technology shares led early gains as investors focused on how tariff clarity could lower the risk premium for global hardware and semiconductor supply chains.
Alphabet Inc. shares rose 2%, reflecting optimism that stabilized trade conditions could improve planning certainty and protect margins for companies tied to complex international inputs.
Industrials also benefited as investors looked through the ruling to the costs of machinery, autos, and logistics, sectors that can face rapid swings in expense and demand when tariffs change without warning.
Manufacturers and exporters often respond quickly to shifts in trade-policy predictability because capital spending and production planning depend on assumptions about input prices and market access.
Retailers rallied on expectations that a less volatile tariff backdrop can stabilize import expenses and inventory costs for apparel, electronics, and household goods.
Costco drew attention in that trade as a retailer already pursuing refunds, and investors viewed the ruling as supportive of lower import-cost expectations and more stable pricing strategies.
Financial stocks rose alongside broader indexes as the decision fed a confidence channel: more predictable economic policy can support business investment and lending activity.
The market’s focus extended beyond the day’s gains. By limiting unilateral tariff authority under IEEPA, the Supreme Court signaled that large trade shifts now face higher legal and procedural hurdles, reducing the chance of abrupt swings in corporate cost structures.
That change matters for companies that must manage exposure across regions and suppliers, because tariffs can force supply-chain redesigns that raise operational expenses and complicate hiring and investment decisions.
Global markets also reacted as investors assessed what lower U.S. tariff volatility could mean for exporters and manufacturing hubs that sell into American demand.
European exporters gained, especially in sectors such as autos and luxury goods that can face sharp demand changes when tariffs rise.
Asian manufacturing centers benefited from expectations of smoother trade flows, with investors pointing to intermediate-goods supply chains that run through Japan and South Korea, among others.
Emerging markets attracted flows as reduced trade tensions can weaken safe-haven demand and improve risk appetite for equities tied to global growth and cross-border commerce.
The Court’s ruling did not erase tariffs from the U.S. policy toolkit. Tariffs under other laws, including Section 301 (Trade Act of 1974) and Section 232 (Trade Expansion Act of 1962), remain intact.
That legal reality framed the next question for markets: whether tariff authority will re-emerge through Congress or through alternative executive pathways, even after the Court struck down the IEEPA approach.
JPMorgan added a probability to that risk, assigning 64% odds to “struck down + immediately replaced” via Section 232/301/122, a scenario that could limit the net upside after the initial repricing.
Investors said the ruling still reduced the volatility premium tied to sudden presidential tariffs, even if it did not eliminate the possibility of new levies through other authorities.
Near term, market participants expected continued strength in trade-sensitive sectors, with rotation into cyclicals as companies and investors absorb the implications of a tighter legal constraint on unilateral tariff power.
Multinationals that depend on predictable import costs and stable cross-border sourcing could see improved planning visibility, a factor investors often treat as supportive for earnings confidence.
Medium-term risks remain tied to political and legislative signals. Congress could pursue trade legislation, and administrations could test other statutory routes, especially as election-cycle dynamics shape market pricing of policy risk.
The ruling also sharpened attention on refund exposure and the fiscal stakes that follow when a major tariff regime gets unwound.
The U.S. collected about $124 billion in customs duties through January 2026, and estimates in the market debate put potential IEEPA-related refunds at $175 billion if claims proceed.
Refunds, however, can prove administratively complex. Companies may need to pursue disputes through the CIT while CBP manages the processing of claims, an arrangement that can involve documentation requirements, timing windows, and litigation posture.
Kavanaugh’s dissent highlighted that operational burden, describing the refund process as a “mess,” a warning investors weighed even as they priced in the possibility that some companies could recover duties.
The fiscal implications also reached beyond corporate balance sheets. Committee for a Responsible Federal Budget (CRFB) estimates $2 trillion added to deficits over a decade without replacements, and President Maya MacGuineas urged Congress to offset via taxes or cuts.
For markets, that mix can create a second-order risk: large-scale refunds could intersect with broader budget negotiations and deficit politics, influencing how lawmakers approach replacement trade measures or revenue offsets.
Investors also watched for how quickly the government and private litigants move in the post-ruling process, including opinion releases through February 25, a timeline that kept attention on near-term legal and administrative signals.
Even with those uncertainties, traders treated the Court’s decision as a structural shift in the balance of power over trade. The ruling pushed the locus of broad tariff authority toward Congress, making abrupt, sweeping changes less likely through emergency powers.
That shift can matter for long-run market volatility. Legal constraints that force clearer authorization can reduce the risk of sudden shocks, even if they cannot remove policy risk altogether.
Winners in the initial market narrative included technology companies, industrial exporters, retailers and consumer brands, and multinational corporations whose costs and demand depend heavily on predictable trade rules.
Emerging market equities also drew interest as investors weighed the potential for steadier trade flows and reduced safe-haven demand when U.S. tariff volatility recedes.
Potential losers included domestic industries previously protected by tariffs and companies that rely on trade barriers for competitive advantage, though the market data in the immediate aftermath focused more on the rally than on specific declines.
The ruling’s reach extended beyond finance into corporate behavior. With trade-policy stability seen as improving, companies may feel more confident about expansion plans and staffing, particularly in sectors that depend on global supply chains.
That dynamic also intersected with the workforce and immigration picture because stronger business confidence and steadier trade conditions can support hiring appetite, including demand for skilled foreign workers.
Industries that benefited in early trading—tech, manufacturing, finance, and logistics—also rank among large sponsors of international talent, even as visa availability and processing constraints can limit near-term outcomes.
For executives and investors alike, Friday’s Supreme Court decision offered an immediate reduction in trade uncertainty while opening a new phase centered on Congress, alternative tariff statutes, and the practical mechanics of refunds—issues that could shape markets well beyond the initial rally.
U.S. Supreme Court Limits Presidential Tariffs and Eases Trade Uncertainty
The U.S. Supreme Court has limited presidential power by ruling that the International Emergency Economic Powers Act does not authorize unilateral global tariffs. The 6-3 decision move trade authority back toward Congress, providing markets with greater policy predictability. While the ruling does not eliminate all tariff tools, it reduces the risk of sudden trade shocks and opens the door for significant corporate tax refunds.
