Market Confidence Tumbles: Tariffs

On November 5, 2025, the Supreme Court of the United States heard oral arguments in the consolidated cases V.O.S. Selections, Inc. v. United States and Learning Resources, Inc. v. United States — a pivotal test of presidential authority over trade policy. The central question is whether the 1977 International Emergency Economic Powers Act (IEEPA), invoked by President Donald J. Trump, grants the president legal authority to impose broad import tariffs during a declared national emergency.

During the hearing, several justices — including Chief Justice John Roberts and Justice Amy Coney Barrett — expressed skepticism that IEEPA authorizes such sweeping powers. Roberts noted that imposing tariffs effectively functions as taxation, a power historically reserved for Congress. The law allows the president to regulate or restrict international transactions during “unusual and extraordinary” national emergencies, but it does not explicitly mention tariffs or duties. Trump’s legal team argues that the statute’s broad language permits import regulation during crises, while opponents claim that using it for revenue-raising tariffs exceeds congressional intent.

Market sentiment has shifted dramatically as the case moves toward a decision. Kalshi traders now estimate just a 21% chance that the Supreme Court will uphold Trump’s tariffs — down nearly 36 points this week. The sharp decline reflects growing skepticism over a favorable ruling and heightened uncertainty across trade-sensitive industries.

A ruling against Trump could invalidate the tariffs and potentially trigger over $100 billion in refunds to U.S. importers, offering relief to companies that faced steep import costs since the policy’s implementation. Conversely, a ruling in favor of the administration could set a powerful precedent expanding presidential emergency powers in economic affairs — a shift with far-reaching implications for trade, sanctions, and national security policy.

For investors, the decision carries major significance. A limitation on executive tariff powers could reduce the frequency of abrupt trade disruptions and improve predictability across global supply chains, while an expansion could introduce greater volatility tied to future emergency declarations. The ruling also has fiscal implications, as any mandated refunds would ripple through federal revenue forecasts and potentially influence broader market liquidity and inflation expectations.

In summary, the Supreme Court’s forthcoming decision will determine the legality of President Trump’s global tariffs and clarify the balance of power between Congress and the executive branch. For global investors and portfolio managers, it represents a key inflection point in U.S. trade governance — one with direct consequences for equity markets, currency flows, and the long-term stability of international commerce.