Will US stocks trigger a "rocket" rally if Trump's tariffs are abolished?

If the Supreme Court ultimately rules that Trump does not have the authority to bypass Congress and initiate a trade conflict, then Wednesday’s market rally may be just the prelude to a bigger celebration.

Written by: Golden Ten Data

What does it mean for things to turn around when they reach their lowest point? The market may soon experience this firsthand.

On Wednesday, U.S. Supreme Court justices expressed clear doubts about Trump’s unilateral power to impose sweeping tariffs. As soon as the news broke, the stock market responded with a surge. In the afternoon, selling pressure on tech stocks eased, and major indexes quickly climbed: the Dow Jones rose by 300 points, and the S&P 500 gained nearly 1%.

If the Supreme Court ultimately rules that Trump does not have the authority to bypass Congress and initiate a trade conflict, then Wednesday’s market rally may be just the prelude to a bigger celebration.

This case touches on significant economic and political nerves. The justices expressed strong skepticism toward Trump’s invocation of the International Emergency Economic Powers Act to circumvent Congress and impose hefty global tariffs.

If tariffs are overturned, it would undoubtedly be a huge boon for the market. Businesses of all sizes would be freed from the import tax burden that has been eroding corporate profits all year.

More importantly, this move would completely dispel the shadow of inflation and remove the biggest concern for the Federal Reserve when setting its monetary policy path.

Cory Johnson, Chief Market Strategist at Epistrophy Capital Research, pointed out why the Supreme Court’s skeptical stance is good news for the stock market: “You could still build factories before, but every watt, every wafer came with an extra cost. The justices’ doubts suggest they may finally pull the plug on this ‘surcharge.’ In a market where cost and speed are everything, this is equivalent to installing a ‘performance accelerator’ for businesses at the policy level.”

Under Trump’s tariff policy, even giant companies have struggled with reshoring manufacturing, creating huge uncertainty for corporate costs and profit expectations. For companies like Apple, whose supply chains span the globe, it’s simply impossible to move factories back to the U.S. just to avoid taxes.

Daniel Bustamante, Chief Investment Officer at Bustamante Capital Management, revealed that his hedge fund believes that once the tariff issue is resolved, it will be a major positive for the stock market. “If the ruling is unfavorable to tariffs, that’s a positive signal for the market. We’re already seeing capital flow into certain sectors, with the market pricing in this benefit ahead of time.”

Consumer brands hit hard by tariffs, such as Stanley Black & Decker, RH, and auto giants General Motors and Ford, all saw significant gains on the news.

On the prediction website Polymarket, the probability that the court would support tariffs has plunged from 45% at the end of October to 27% as of Tuesday afternoon.

Bustamante’s team optimistically believes that this positive market momentum could last for several days or even weeks, depending on subsequent developments and the likelihood of the court’s ruling.

Meanwhile, Michael Reynolds, Vice President at Glenmede, reminded investors to pay attention to an even more explosive issue: whether the Supreme Court has the authority to order the refund of previously collected tariffs.

He pointed out: “By the time the ruling is issued (possibly in early 2026), the total tariffs collected through emergency powers could exceed 100 billions of dollars. If this money must be refunded, the impact would be far beyond imagination—equivalent to adding a massive ‘corporate cash stimulus’ on top of the ‘CHIPS Act’ and the Federal Reserve’s accommodative policies.”