The stock market wants to move on from tariffs. The Supreme Court may not let that happen.
Tariffs were a solved problem for the stock market that Supreme Court oral arguments may move back to the front burner.
For the stock market, tariffs have largely been a solved problem for months — barring the recent flare-up with China over rare earths, which was seemingly resolved by a meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea.
The twin truths of “Trump Always Chickens Out” and “Trump Always Raises Tariffs” led to an uneasy equilibrium in which Corporate America prepared for doomsday but ended up in a considerably less dire situation. As WisdomTree macro strategist Sam Rines flagged, this process of adapting operations and expenses meant that some firms, instead of facing a tariff hangover, were in for an even bigger profit party, with financial outlooks that were superior to the pre-tariff world.
It’s often said that markets hate uncertainty — markets also hate the certainty of bad outcomes, to be clear — and Rines is now warning that the uncertainty over trade that loomed large in the first four months of the year is poised to return.
In other words, the only thing we have to fear is more tariff uncertainty fear. In recent days, Polymarket ascribed odds of about 36% to 38% of the Supreme Court ruling in favor of Trump’s tariffs (that is, not striking them down).
That’s zoomed up to as high as a coin flip on Wednesday morning ahead of oral arguments slated to begin at 10 a.m. ET on Wednesday in a case challenging the president’s authority to enact wide-ranging tariffs without congressional approval under “emergency” powers.
If the Supreme Court upholds the lower court rulings that the president does not have the authority to put broad tariffs in place under the International Emergency Economic Powers Act of 1977, the story doesn’t end there.
Per Rines:
“There is a high likelihood the IEEPA tariffs are ruled against by SCOTUS. But — in the end — it doesn’t really matter for the overall tariff picture. It only changes the legal mechanisms that will be used. In fact, it takes something that companies / markets had largely dealt with and moved on from and brings them back into the narrative.”
“Now, there is the potential for further uncertainty around tariffs to be injected into the system. Importantly, risk markets are not going to wait to make a determination on the tariffs until the SCOTUS ruling comes out (that could be in December or as late as Summer of 2026).”
“And that is what makes Wednesday intriguing. Tariffs are not going away with a SCOTUS ruling. They will simply shift forms. It is an odd ‘pick your poison’ type of event. For now, the tariff narrative is ‘nearly dead’. But starting Wednesday, the tariff narrative could make quite the comeback. Worth watching the Industrials and the Consumer Cyclical names on Wednesday, they should be telling.”
Signum Global Advisors agrees that the stretch between the Supreme Court hearing oral arguments and its ruling could be very fraught on the tariff front, particularly when it comes to remarks from the president in the intervening period.
“While all eyes are on the Trump administration’s potential reaction following the Court’s decision, we would argue President Trump’s most volatile comments could in fact come in the lead up to the ruling,” analysts Andrew Bishop and George Pollack wrote.
