We have previously written about how the US Supreme Court has become an increasingly influential driver of financial markets. That influence was displayed on 20 February, when the court ruled that President Donald Trump’s sweeping tariffs on US trading partners did not comply with federal law.
The 6-3 ruling marked a significant setback for the administration’s economic agenda and created additional uncertainty around existing trade deals.1 It also opened the door to the possibility that the United States government could eventually be required to refund billions of dollars to businesses that had paid the tariffs, even though many had already passed the costs on to consumers.
Markets welcomed the court’s decision, as it implied legal limits on the administration’s use of tariffs as a negotiating tool. However, this was tempered by the administration’s replacement tariff framework, which started at 10% and could rise to 15%, using a legal provision that allows the president to impose a broad tariff for 150 days without congressional approval. On 25 February, US Trade Representative Jamieson Greer said that they wanted to “give continuity and be able to be in a position where we can honour the deals.”2 This suggests that the UK – which had already agreed to a 10% deal with the US last year – may be insulated should tariffs rise to 15%.3
A key unanswered question is whether companies – and indirectly consumers – will receive refunds for the roughly $130 billion raised through the original tariffs. The Supreme Court did not rule on this point, leaving the issue to be decided in further litigation, likely through the United States Court of International Trade, which handles disputes over trade policy.4
In practice, refunds may be unevenly distributed. Larger corporations typically have the legal resources and administrative capacity to pursue claims, while smaller businesses may struggle with the cost and complexity involved. This creates uncertainty not only for government finances but also for corporate earnings in sectors most exposed to global supply chains.
The ruling also impacts public finances. The US is currently running a budget deficit of roughly $2 trillion5, and tariffs had become a growing source of revenue to help narrow the gap.
If replacement tariffs bring in less money – some estimates suggest around $70 billion less over a year6 – the gap between government spending and income would widen slightly. While this is not large enough on its own to change the fiscal outlook, it adds to a broader debate about how deficits will be financed in the years ahead.
This matters for investors because larger deficits typically mean increased government borrowing. That can influence bond supply, the extra yield investors demand for holding long-term bonds (also known as the term premium), and ultimately, valuations across asset classes. Market participants are therefore watching US Treasury yields closely for signs that fiscal concerns are feeding into borrowing costs.
In the near term, the shift to a new tariff framework creates uncertainty. Businesses will need to reassess supply chains, pricing and investment decisions without clarity on how long current tariffs will last or whether additional measures could follow.
At the same time, the ruling carries an important longer-term message: it limits the president’s ability to impose tariffs unilaterally. Any future trade restrictions are more likely to involve Congress or follow formal investigative processes, which tend to be slower and more predictable. This does not eliminate trade tensions, but it reduces the risk of sudden policy changes that can unsettle markets.
The broader takeaway is that, while the ruling may create a period of adjustment for markets in the short-term, it improves longer-term visibility. Markets typically prefer clear rules over rapid policy swings. A more constrained approach to tariffs could therefore reduce volatility in trade policy, even if geopolitical tensions persist.
[1] Supreme Court Justices Strike Down Trump’s Tariffs - The New York Times
[2] Trump to hike U.S. tariff to 15 per cent 'where appropriate' | Financial Post
[3] Trump Says He Will Raise Global Tariff to 15 Percent - The New York Times
[4] Refunds for tariffs and Trump's new levies - what to know - BBC News
[5] National Deficit | U.S. Treasury Fiscal Data
[6] Strategas, 23 February 2026
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