The Supreme Court has overturned part of the tariffs. What is next?

Third time’s the charm. After two missed expectations, the Supreme Court finally ruled last Friday on the legality of the tariffs. And the result was as most analysts expected: Trump overstepped his authority by imposing tariffs under the IEEPA. And we're talking about approximately 60% of all tariffs.

Let’s start with why this is good news.

Removing the tariffs, although partially, eliminates a pro-inflationary factor.

In theory, that could have allowed the Fed to cut rates more quickly, something Fed Chairman Jerome Powell has hinted at on more than one occasion in his speeches. The only problem is that the next day, Trump invoked his authority under Section 122 of the Trade Act of 1974 and imposed a 15% ad valorem tariff for 150 days.

So we probably shouldn’t expect accelerated rate cuts following the Supreme Court’s decision. The Fed is also unlikely to rush into monetary easing, especially given that U.S. inflation hit 2.9% year-over-year in December 2025 — the highest level since March 2024. One potential beneficiary of this could be the U.S. dollar index.

Another positive from the partial rollback of tariffs is that it shows U.S. institutions are still functioning. The system isn’t broken, and independence remains. It also suggests that, even with a loyal Fed chair, controlling the central bank would not be easy, thus maintaining the U.S. market attractiveness to investors.

Now to the downsides.

About $200 billion in tariffs collected over the past 10 months may need to be refunded. The somewhat reassuring part is that most of the refunds would go to domestic businesses, since a recent New York Fed study found that nearly 90% of the 2025 tariff burden fell on U.S. companies and consumers.

For instance, FedEx has sued for reimbursement, and companies like Costco, Revlon, and Bumble Bee Foods had filed claims even before the Supreme Court ruling. These cases are unlikely to be resolved quickly and could drag on for years, creating prolonged fiscal uncertainty and a headache for the Treasury.

Overall, litigation costs, potential repayments, and related expenses would add pressure to a budget already running persistent deficits. If no solution is found and U.S. public debt continues to deteriorate, investors in Treasury bonds may demand a higher risk premium, keeping yields elevated or even pushing them higher.

So overall, the tariff rollback is good news, but it also creates a headache for the U.S. Treasury.