Supreme Court Scrutinizes Legality of Trump Tariffs, Igniting U.S. Trade Policy Turmoil

On November 5, 2025, the US Supreme Court held nearly three hours of oral arguments over the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA), far exceeding the scheduled time and underscoring the complexity of the case. The effective tariff rate announced for September 2025 stood at about 22.25%, while actual tariff revenue in October declined to around 11.28%. The annual growth rate of the US goods trade deficit had once surged to 67.5%, but has since slowed notably as trade tensions intensified, signaling that the market is entering another period of volatility.

During the hearing, several justices questioned whether Trump exceeded presidential authority by invoking IEEPA to levy broad, global tariffs, as the statute does not explicitly grant such tariff-imposing powers. Both conservative and liberal justices expressed skepticism about the measure’s constitutionality. Should the ruling go against the Trump administration, portions of the tariffs may need to be withdrawn or reassigned to other legal bases. This judicial uncertainty is influencing corporate investment decisions and market expectations, heightening the demand for clearer trade policy direction among businesses and investors.

The Supreme Court is expected to issue a decision within the next few weeks, determining whether the large-scale tariff framework introduced under Trump can remain in place. If the tariffs are overturned, corporate costs and consumer prices could ease, potentially supporting retail and manufacturing stocks. Conversely, if the tariffs are upheld, supply chain disruptions and inflationary pressures are likely to persist. In the medium term, the ruling will redefine the scope of presidential authority over trade policy and reshape the balance of power between the executive and legislative branches. Markets will need to closely monitor the trajectory of US trade policy and its broader implications for global supply chains.