This is how the market reacts to the Supreme Court ruling on tariffs

WASHINGTON, Feb 21 — The US Supreme Court has ruled that the International Emergency Economic Powers Act (IEEPA) does not grant presidential authority to impose tariffs, invalidating all duties imposed under IEEPA since February 2025. The decision dismantles the largest component of the administration’s tariff framework, forcing a pivot to Section 122 authority.

Chief Economist Claudio Galimberti of Rystad Energy noted that while the ruling weakens targeted tariffs, it does not end protectionism. The Trump administration has introduced a uniform 10% global tariff, with potential escalation to 15%. Analysts at the Yale Budget Lab estimate that if exemptions are removed, the effective tariff rate could rise to 24.1%, surpassing the invalidated IEEPA structure.

Market reacts

Markets welcomed the ruling as a sign of judicial independence and anticipated fiscal stimulus from potential tariff refunds, estimated at $175 billion. However, refund mechanisms remain unresolved, with the Court of International Trade expected to decide.

Section 232 tariffs on steel, aluminum, automobiles, and pharmaceuticals, as well as Section 301 duties on Chinese goods, remain intact. The ruling also raises prospects for new bilateral trade negotiations, as uniform tariffs must apply across all partners. Treasury yields climbed amid expectations of fiscal expansion and a more hawkish Federal Reserve.

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