The U.S. Supreme Court delivered what many economists viewed as a potential off ramp for President Donald Trump’s aggressive tariff agenda, ruling 6–3 that key elements of his emergency-based import levies were unlawful. Markets initially interpreted the decision as a possible step toward reduced trade friction and lower consumer costs. Yet within hours, Trump signaled he would not retreat. Instead, he moved to deploy alternative statutory authorities to maintain — and potentially expand — tariffs. The result: trade uncertainty remains entrenched, with implications for growth, inflation, and capital investment.

A Legal Setback — but Not a Policy Retreat

The Court’s ruling struck down many of the tariffs enacted under emergency powers, but it left other trade authorities untouched. Trump quickly announced a 10% global tariff under Section 122 of the 1974 Trade Act, later raising it to the statutory ceiling of 15%. While Section 122 tariffs require congressional approval beyond 150 days, the administration has suggested flexibility in how that timeline may be managed.

Additional options remain on the table. Section 301 of the 1974 Trade Act permits tariffs following investigations into unfair trade practices, with no explicit ceiling on rate or duration. Trump also referenced Section 338 of the Tariff Act of 1930, a rarely used provision that could authorize tariffs up to 50% on countries deemed discriminatory — a mechanism rooted in the era of Smoot-Hawley.

The effective U.S. tariff rate, which stood near 10% prior to the ruling, has fallen to roughly 4.5% but could climb back above previous levels if new authorities are aggressively applied. For businesses and investors, the key issue is not merely the rate itself but the unpredictability of its evolution.

Investment Drag and Labor Market Signals

Economic data suggest tariffs have already weighed on corporate behavior. Business investment outside the technology sector contracted last year — a rare occurrence outside recessionary periods. Job growth also slowed significantly, marking the weakest year for employment gains since 2003 outside of downturns. Manufacturing employment, despite being a central target of tariff protection, declined by more than 80,000 positions.

Economists argue that policy volatility — rather than tariff magnitude alone — has contributed to capital expenditure hesitancy. Even if average tariff levels remain steady, shifts in product-specific or country-specific duties create relative winners and losers, complicating supply-chain planning.

Some analysts project that the administration may use overlapping legal frameworks to maintain overall tariff pressure while redistributing its structure. Such realignment could further cloud business outlooks, particularly in trade-exposed industries.

Prices, Politics, and Policy Risk

From a consumer perspective, the Supreme Court decision is unlikely to bring immediate relief. Companies rarely lower prices once raised, particularly amid policy ambiguity. Even if courts ultimately require refunds of previously collected tariff revenue — estimated at $134 billion — economists expect limited pass-through to shoppers.

Estimates suggest tariffs increased average household tax burdens by roughly $1,000 last year, with projections of further increases prior to the Court’s intervention. Yet public opinion toward tariffs has grown more negative, particularly as elevated prices persist.

The broader irony is that a judicial check intended to limit executive overreach may instead catalyze alternative pathways for continued tariff expansion. Investors now face a landscape in which legal authority, political calculus, and economic impact intersect.

Looking ahead, markets will closely monitor whether Congress intervenes, how courts interpret refund obligations, and whether international partners respond with countermeasures. In a fragile macro environment marked by slowing growth and geopolitical tension, trade policy remains a critical variable. Rather than reducing uncertainty, the ruling may simply have reshaped its form.