All eyes are on the U.S. Supreme Court this week as it prepares to rule on the legality of former President Donald Trump’s emergency tariffs—a decision that could send shockwaves through global markets. 🚨 Analysts warn the ruling, expected as early as Friday, may redefine executive power and trigger volatility in stocks, bonds, and Treasury yields.
The Legal Showdown
The case challenges Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval. During November 2025 arguments, justices expressed skepticism, and prediction markets now give only a 30% chance of the tariffs being upheld. A reversal could force the U.S. government to refund up to $200 billion to importers—equivalent to 'sucking liquidity out of the system,' warns KEY Advisors CEO Eddie Ghabour.
Market Rollercoaster Ahead?
Stocks initially plunged 5% when tariffs were announced in April 2025 but rebounded strongly, with the S&P 500 gaining 16% last year. Investors now speculate a pro-business ruling could boost sectors like retail and electronics. Small-cap stocks, already up 4% this year, might get 'rocket fuel' from tariff relief, says Ghabour.
But risks loom: Treasury yields could spike if tariff revenue drops, and the administration might quickly deploy alternative legal tools to reimpose levies. 'The market is ignoring that the president keeps threatening more tariffs,' cautions Twin Focus Capital’s John Pantakidis.
Fiscal Fallout & Prediction Markets
JPMorgan estimates annual tariff revenue could fall by $100 billion if the court strikes down the policy, reviving concerns about the U.S. fiscal deficit. Meanwhile, prediction markets like Polymarket show heavy betting activity, with one user risking $50,000 on the outcome.
As investors brace for impact, Nomura’s David Seif predicts: 'By late 2026, we’ll likely have a tariff regime that looks almost exactly the same.' Whether the ruling brings calm or chaos, one thing’s clear—2026’s economic landscape is anything but predictable. 🌪️📉
