Despite a Supreme Court ruling against the president's broad reciprocal tariffs, the administration is expected to re-impose them using more targeted, sector-specific legal authorities. This means economic relief from lower tariffs will be short-lived, as the underlying protectionist policy stance remains.

The immediate macroeconomic impact of the recent tariff ruling is negligible. However, a potential economic boost could occur in Q3 and Q4 if the temporary 150-day tariffs expire and investigations for new tariffs are delayed, leading to increased consumer demand and goods disinflation.

Even if the Supreme Court rules against the administration, it may not change U.S. tariff levels. The executive branch has alternative legal authorities, like Section 301, that it can use to maintain the same tariffs, making a court defeat less of a market-moving event than it appears.

While the base case is that the President would replace tariffs struck down by the Supreme Court, there's a growing possibility he won't. The administration could use the ruling as a politically convenient way to reduce tariffs and address voter concerns about affordability without appearing to back down on trade policy.

Because U.S. tariff levels are likely to remain stable regardless of legal challenges, the more critical factor for the long-term outlook is how companies adapt. Investors should focus on corporate responses in capital spending and supply chain adjustments rather than the tariff levels themselves.

The inflationary impact of tariffs is appearing slower than economists expected. Companies are hesitating to be the first to raise prices, fearing being publicly called out by politicians and losing customers to competitors who are waiting out the trade policy uncertainty.

Given a tight legislative calendar and procedural hurdles in Congress before an election, sweeping legislation is improbable. The administration is more likely to rely on executive actions, like agency directives and tariff policy changes. These tools can be implemented quickly and unilaterally to provide voters with a tangible impact ahead of November.

Following the ruling, Trump immediately invoked Section 122 of the Trade Act to impose a 10% tariff. This authority is limited—up to 15% for only 150 days. This creates a ticking clock for his administration to build more complex legal cases under other statutes, like Section 301, to make the tariffs permanent.

Immediate tariff relief on consumer goods is minor (1-4%), but a significant opportunity exists after the 150-day temporary tariff period. If no new sector-specific tariffs are implemented, categories like apparel could experience a dramatic 16-17 percentage point tariff reduction, boosting purchasing power.