The Supreme Court may not make a final decision on President Trump’s tariffs

The U.S. Supreme Court heard a case Wednesday regarding the Trump administration’s “reciprocal” tariffs, with both liberal and conservative justices appearing skeptical of the legal basis for these tariffs.

Following the hearing, traders at prediction market Polymarket now believe there is only a 25% chance that President Trump’s tariffs will remain in place, down from about 50% a day earlier.

Markets rose after the hearing, with major U.S. indexes rebounding from Tuesday’s losses. Still, eliminating tariffs is not a clear win for stocks.

If the Supreme Court were to force the White House to repay billions of dollars in tariffs collected (which Wolf Research says has “little legal basis”), the U.S. government would be further mired in debt. As a result, U.S. Treasury yields may also rise, as they have already done on Wednesday, which could put pressure on stock prices.

Meanwhile, Trump could use other executive powers to reinstate tariffs, creating further unpredictability for businesses and markets.

“Uncertainty and abnormality are the two big keywords for 2025,” said Mitchell Goldberg, Head of Client First Strategy. “If the Supreme Court rules against the administration, I don’t think that’s the end of the road for tariff policy. It’s just another hurdle.”

—CNBC’s Dan Mangan and Jeff Cox contributed to this report.