How Markets Interpreted the Tariff Ruling
CIO, Multi-Asset Strategies and Solutions
The defining macro event last week was the Supreme Court’s 6–3 decision to strike down President Trump’s global “Liberation Day” tariffs imposed under IEEPA authority, reaffirming that tariff powers rest with Congress rather than the executive branch. The decision overturned a system that had driven average tariff rates close to 25%. In response, President Trump plans to implement a new broad 10% tariff (that may potentially be raised to 15%) under Section 122, citing issues with international payments as the justification.
With the outcome largely priced in, market reactions were varied but maintained their balance. Treasury curves offered mixed signals—bond yields, balancing growth concerns against the fiscal implications of lost tariff revenue, only rose modestly. The dollar traded without clear direction, consistent with policy uncertainty rather than a decisive macro shift. Echoing rates and currency moves, the S&P 500 responded modestly, suggesting that equities interpreted the decision as a policy adjustment rather than a global shock.
The bottom line: Taken together, the ruling represents a significant legal shift but only a modest economic one, replacing a sweeping tariff framework with a more targeted policy. For asset allocators, the mixed cross asset response reinforces the value of diversified exposures and flexible positioning.
Julia Rozenfeld contributed to this article.