Supreme Court’s Trump tariff decision: 5 points

The Supreme Court’s decision Friday to strike down massive tariffs imposed on imports by President Donald Trump was widely expected. Far less certain is the long-term impact as economies and markets readjust to changed conditions.

President Trump and other White House officials have promised to use other authorities to enforce the tariffs, and the president has already announced a 10% tariff under provisions of the 1974 Trade Act.

But the question remains: what effect will it have on prices? Will companies that paid customs duties that are the subject of the High Court’s decision seek refunds? How will the Federal Reserve respond?

Here are five takeaways from the ruling and its implications.

1. Economic impact

In short, the macro impact is expected to be limited, especially until we see President Trump’s next move and the issue of refunds.

Joseph Brusuelas, RSM’s chief economist, characterized the potential economic impact as “narrow,” but said there were “huge potential winners from this ruling,” particularly in tariff-sensitive retail and manufacturing industries.

Growth slowed significantly in the fourth quarter, with GDP accelerating by just 1.4% annually. However, this is mainly due to the government shutdown, and growth is likely to accelerate in the first quarter of 2026.

“Financial conditions already point to a significant turnaround in 2026 on the back of the One Big Beautiful Building Act and accommodative monetary policy,” said Jason Pride, head of investment strategy and research at Glenmede. “Tariff decisions could ratchet up this stimulus and strengthen expectations for above-trend economic growth.”

Pride warned that there could be a temporary drag on exports if companies rush to import products ahead of President Trump’s next round of tariffs, as they did in early 2025.

2. Some support against inflation

The court’s decision came on the same day the Commerce Department reported that core inflation held at an annual rate of 3% in December, according to the Fed’s key forecast indicator. Central bank officials estimate that the tariffs would be worth about 0.5 percentage point to inflation, but the impact would be at least temporary because it would be reflected in how inflation is calculated.

Eliminating tariffs would therefore reduce the potential economic headwinds that could currently impact the Fed’s interest rate decisions this year.

Interestingly, CME Group data showed that markets on Friday slightly backed off bets on a rate cut, making it more likely that the next rate cut would occur in July rather than June as previously indicated. Traders still expect two rate cuts this year, and the probability of a third cut is about 40%, little changed from before the decision.

“We do not believe the Supreme Court’s decision to eliminate IEEPA tariffs will have a significant macro impact on the U.S. economy or the Federal Reserve,” Evercore ISI analysts said in a note.

3. Relief to the market

For much of the past year, financial markets have been periodically spooked by President Trump’s tougher tariff declarations, but they started rising again after Trump ultimately reversed many of his most aggressive policies.

As expected, stocks rose on Friday, dispelling concerns about the pace of growth and inflation and boosting expectations for corporate earnings. U.S. Treasury yields were trending higher, but the move was subdued as investors debated the merits of growth and inflation.

“More broadly, this decision emphasizes a shift to looser, procedurally constrained trade policy, reducing headline volatility but increasing the importance of fiscal mechanisms and supply considerations in fixed income markets,” said Dan Silk, head of global short-term duration and liquidity and portfolio manager at Janus Henderson.

4. What about refunds?

Wall Street’s reaction to the outlook for tariff refunds was mixed.

Morgan Stanley estimated that the United States would likely repay around $85 billion to affected parties. RSM’s Bruzuelas put the figure at between $100 billion and $130 billion, while Raymond James analyst Ed Mills put the spending higher, at about $175 billion, in line with the University of Pennsylvania’s model.

One question is process. The Supreme Court’s decision does not specifically address this issue, presumably leaving it to lower jurisdictions. Justice Brett Kavanaugh said resolving the issue could be “chaotic.” Brian Gardner, Stifel’s chief Washington policy strategist, estimated that there would be no retroactive refunds at all once the issue is heard in lower courts.

“While we remain skeptical that the government will refund or pay significant amounts, the issue remains open,” Gardner said in the memo.

5. What now?

The road from here will be complicated, but President Trump signaled at a news conference Friday that he has no intention of backing down on the tariff efforts he repeatedly called “the most beautiful word” in the dictionary.

One important point is that tariffs are not going away.

President Trump has used the International Emergency Economic Powers Act to cover about 60% of the tariffs he has implemented, with the rest remaining in place. From there, the administration can cite many provisions of the trade law to impose tariffs.

However, many of the measures must be approved by Congress, and some measures have deadlines.

“Given previous court rulings and the public outrage over President Trump’s criticism of tariffs, I would not be surprised to see meaningful tariff increases or action from the White House sooner rather than later,” wrote Chris Krueger, managing director at TD Cowen Washington Research Group. Krueger predicts that the 2026 tariff effort will be “all gasoline, some (temporary) brakes…stay tuned.”