The Supreme Court this week struck down the use of IEEPA (International Emergency Economic Powers Act) as a valid legal basis for many of the Trump administration tariffs in a 6-3 decision written by Chief Justice John Roberts with Justices Thomas, Alito, and Kavanaugh dissenting.

The main takeaway is clear: “Held: IEEPA does not authorize the president to impose tariffs.” At the same time, this does not mean the President can never impose any tariffs at all – they can, but will need Congress to weigh in.

What happens now that tariffs are struck down?

The long and short of this is that now that the IEEPA tariffs are struck down, the administration has several other tools to re-impose the same tariffs, but those will take time. That leaves the future uncertain and messy with a lot of uncertainty for businesses. On the upside, there is an immediate reprieve from current tariffs, which may act as a kind of tax cut for businesses, at least temporarily

Final Takeaway

This is a major loss on a central policy of the Trump administration, but while they’ve lost an important battle they have not lost the war. In the near term, all the main takeaways act as economic stimulus with the only negative the renewed uncertainty on what future policy will be. Worst case, the level of tariffs will eventually be something like where they are now, but it would take time to get there. In the interim this is good for businesses and we could see aggressive inventory restocking to take advantage of the pause, and a boost to margins also means this could be a net positive for stocks.