Washington | In a stunning rebuke to President Donald Trump’s aggressive trade policies, the US Supreme Court on Friday struck down his administration’s sweeping global tariffs. The 6-3 ruling effectively derails a cornerstone of the President’s “America First” economic agenda, triggering massive shockwaves across global financial markets.
The immediate aftermath saw a sharp divergence on Wall Street: equities surged on the promise of improved corporate profit margins, while the bond market took a defensive posture, sending Treasury yields climbing amid fears of a ballooning national debt.
The Ruling: Executive Overreach The legal battle centered on Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to unilaterally impose tariffs of up to 50% on goods from nearly every country. Writing for the majority, Chief Justice John Roberts stated that the emergency authority the President attempted to rely on “falls short.”
“The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope,” Roberts wrote. He emphasized that the Constitution vests the power to levy taxes squarely with Congress, noting that the executive branch must identify clear congressional authorization to exercise such sweeping financial control.
According to sources familiar with the matter, Trump reacted furiously to the verdict, privately calling the decision a “disgrace” during a morning meeting with state governors.
Stocks Celebrate the Relief For corporate America and global supply chains, the Supreme Court’s decision was the equivalent of a massive stimulus package. Equity markets rallied immediately following the news. Industrial manufacturers, retail giants, and transportation companies—all of which heavily rely on imported goods and raw materials—led the surge.
Beyond lowering the daily cost of doing business, the ruling opens the door for companies to seek refunds on an estimated $175 billion in duties already collected by the U.S. government. For businesses that had warned of passing tariff costs down to everyday consumers, Friday’s verdict is a hard-fought victory.
Bond Vigilantes Wake Up However, the celebration on the stock exchange floor stood in stark contrast to the anxiety gripping the bond market. The US 10-year Treasury yield quickly spiked to 4.1% following the ruling.
This reaction stems from the grim reality of America’s fiscal math. The Trump administration had heavily relied on the massive influx of tariff revenue to offset the national debt and fund proposed tax cuts. With that revenue stream abruptly shut off, investors realize the government will be forced to borrow significantly more money to fund its operations.
This prospect has awakened the so-called “bond vigilantes”—investors who demand higher yields to compensate for the risk of lending to a government with deteriorating fiscal health. A higher national deficit could also complicate the Federal Reserve’s plans for future interest rate cuts, adding a layer of long-term economic uncertainty.
While the verdict offers immediate relief to global trade partners and corporate bottom lines, the resulting fiscal gap leaves Washington facing a multi-trillion-dollar headache.
