The markets were all over the place on Friday after the Supreme Court ruled that President Donald Trump’s “Liberation Day” tariffs were unconstitutional.
The massive ruling came down at 10 a.m., after markets were already in the red following a much worse-than-anticipated economic growth report and a hotter-than-expected inflation report, but stocks soon rose upon the news that the tariffs were overturned.
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After going up initially, stocks pared those gains and were largely flat for most of the day as investors struggled to interpret what the ruling means for the longer term. The Dow Jones Industrial Average closed up 231 points, or about 0.5%. The benchmark S&P 500 ended 0.69% higher, and the tech-heavy Nasdaq rose 0.9%.
Notably, many Wall Street analysts had been expecting that the high court would undo or at least some of the tariffs, so some of the ruling was already baked into the markets.
“Initially, you get a bit of a strong reaction, and then you get some interpretation and digestion of that,” Stephen Kates, a financial analyst at Bankrate, told the Washington Examiner. “I think my impression is that we don’t know enough to even make a determination as to whether this is good, bad, or indifferent.”
“There are so many things that we just don’t know about how this is going to play out,” he added. “I think no reaction, no action on the case of businesses and investors, is the default, simply because there’s so many ways that this could change.”
One of those unknowns is just how many of those tariffs stripped by the Supreme Court will be able to be reapplied under different statutes and trade laws.
David McGarry, research director at the Taxpayers Protection Alliance, said that it’s very difficult for businesses and the general markets to operate in “uncertain climates,” such as when there is uncertainty about how the tariff environment might look down the road as a result of the ruling.
“It’s a very heavy lift to invest your money somewhere, to take some risk, if you don’t have any kind of surety that your expectations will be met,” he told the Washington Examiner. “So, I’m sure that businesses will get a better sense of how this is all going to work over the course of the next days and weeks.”
Gina Bolvin, president of Bolvin Wealth Management Group, pointed out that the ruling still doesn’t apply to the entirety of Trump’s tariff agenda.
“The market reaction to the Supreme Court’s ruling on Trump-era tariffs was muted, suggesting it was largely priced in. Because [International Emergency Economic Powers Act] tariffs accounted for about 60% of those imposed, the decision’s economic impact is limited,” she said. “Retail stocks are benefiting from expectations of lower cost pressures.”
Still, Bolvin noted that the ruling could increase the likelihood of Federal Reserve interest rate cuts if tariff-related headwinds ease.
It’s notable, too, that the Supreme Court ruling essentially evaporated a key revenue stream for the federal government. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that the ruling puts the U.S. fiscal footing in a $2 trillion deeper hole.
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Interest rates on long-term Treasurys rose a bit on Friday. The dollar was also down slightly after the ruling was announced.
“The long-term interest rates are up slightly, but I would have thought they should be up a lot more, the dollar should be weaker, because it means that the U.S. public finances, which were shaky before the Supreme Court’s decision are now shakier by a couple hundred billion dollars,” Desmond Lachman, a senior fellow at the American Enterprise Institute, told the Washington Examiner.
