Financial markets plunged into uncertainty after the U.S. Supreme Court ruled President Donald Trump's reciprocal tariffs unlawful, upending global trade order just as concerns over inflation and employment were already running high.
The Supreme Court ruled on the 20th that the International Emergency Economic Powers Act (IEEPA) does not grant the president authority to impose tariffs. The case originated when Trump declared chronic trade deficits a national security threat last April and imposed reciprocal tariffs under IEEPA—the first time a president used the 1977 law, traditionally reserved for sanctions against adversarial nations, to levy tariffs based on trade imbalances or manufacturing competitiveness.
Lower courts in May and August had ordered the tariffs withdrawn, ruling that Congress holds exclusive tariff authority. The Supreme Court affirmed those decisions.
Economists from the University of Pennsylvania's Penn-Wharton Budget Model estimate refund claims could reach $175 billion, according to Reuters.
Three hours after the ruling, an visibly agitated Trump announced at a White House press conference he would offset the invalidated tariffs with new measures. He immediately ordered a 10% "global tariff" on all countries under Section 122 of the Trade Act, effective from the 24th for up to 150 days.
Trump simultaneously announced tariff investigations under Section 301 of the Trade Act, which authorizes tariffs against unfair foreign government practices.
Treasury Secretary Scott Bessent said at the Dallas Economic Club that combining Section 122, 232, and 301 authorities would keep tariff revenues "virtually unchanged" this year.
New York markets initially rallied on hopes of reduced trade tensions. The Dow Jones Industrial Average gained 0.47%, the S&P 500 rose 0.69%, and the Nasdaq Composite climbed 0.90%, despite weaker-than-expected Q4 GDP growth (1.4%) and higher-than-forecast December PCE inflation (2.9%).
On the 21st, Trump posted on Truth Social that he would raise the global tariff to the maximum permitted 15% "with immediate effect."
Fiscal concerns pushed the 10-year Treasury yield to 4.09% and the 30-year yield to 4.74%. The dollar index fell to 97.79 after four consecutive days of gains. Bitcoin dropped about 2% to the mid-$67,000 range.
Safe-haven assets rallied, with spot silver surging 8% to above $84 per troy ounce and gold climbing over 2% to recover the $5,000 level.
Fed funds futures showed a 96.5% probability of the Federal Reserve holding rates steady at its March 17-18 meeting, up from 94.6% the previous day.
Markets now focus on Trump's address to Congress on the 24th, where he may unveil more aggressive trade measures.
Nvidia's fiscal Q4 and full-year results, due after market close on the 25th, represent another major catalyst. Investors will scrutinize the contribution from its cutting-edge "Blackwell" AI chips and fiscal 2027 guidance amid ongoing debates about AI sector disruption and overinvestment concerns.
The situation is further complicated by Blue Owl Capital's asset sales and fund redemption suspensions, which have fueled concerns about AI sector destruction and potential financial crisis.