One of last week’s most anticipated events was supposed to be a ruling from the U.S. Supreme Court. But January 9 came and went…, and nothing happened. The Court later hinted there might be a decision on Wednesday, January 14, although there’s no confirmation it will address the global tariffs case.
For now, markets seem largely unfazed by the tariff story. Major indices like the S&P 500 and Nasdaq continue to climb, even as the president insists that removing tariffs would be a “disaster” for the U.S.
Is there cause for concern? What’s really at stake here?
If the Supreme Court ultimately overturns the Trump-era tariffs, the federal budget could be required to refund hundreds of billions of dollars.
The Bipartisan Policy Center estimates that the tariffs generated around $288 billion in 2025, while Politico puts the figure closer to $261 billion. Although this is below Treasury Secretary Scott Bessent's estimates, which range from $500 billion to $1 trillion, the figure is still significant, especially given the U.S.’s already fragile fiscal position.
By the end of 2025, federal debt had ballooned by $2.3 trillion to a staggering $38.5 trillion, with interest expenses reaching a new all-time high in December. The Federal Reserve's rate cuts in 2025 provided only limited relief and are unlikely to be of much help in the future, as constant political pressure on the central bank could undermine its independence, prompting foreign investors to reduce their exposure to dollar-denominated assets and causing Treasury yields to rise.
To make matters worse, the president recently announced his intention to increase the military budget to $1.5 trillion. And, of course, geopolitical risks also play a role. If more countries begin to view the U.S. as a colonizer rather than an ally, that could accelerate capital flight from U.S. assets, including the dollar and Treasury bonds.
That said, there is a silver lining if tariffs are eventually removed. Their removal could partially restore investor confidence in U.S. institutions and potentially support a stronger dollar. It would also be good news for businesses, as lower input costs would improve margins and profits, which, at least in theory, would support stock markets. Even the gold price could experience a pullback, driven by reduced demand for safe havens and higher real rates in dollar terms.
The catch is that Trump's team probably already has alternative ways to reintroduce tariffs. If so, any initial market rally could be short-lived.