The next major catalyst is the pending decision from the U.S. Supreme Court on whether President Trump can rely on emergency powers to impose broad tariffs. The case is not about whether the President has tariff authority in general, but whether the specific legal justification used in 2025 holds up.
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During oral arguments, the Court sent a clear signal. Several justices expressed skepticism that emergency powers can support wide, across-the-board tariffs. At the same time, they explicitly acknowledged that the President retains tariff authority under national-security laws. Justice Kavanaugh stated on the record that if the emergency tariffs are struck down, the President still has Section 232 available, and that the Court was not questioning existing national-security findings. Chief Justice Roberts also pressed the government on what happens to tariffs already collected, signaling serious concern that unlawfully imposed tariffs may not be retained — raising the possibility of very large refunds.
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For markets, this creates a sequencing problem rather than a binary outcome.
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Using aluminum as a practical example of how this could play out: aluminum tariffs were initially set at 10% under national-security authority in 2018, and later increased substantially in 2025 under emergency powers. If the Court invalidates the emergency justification, tariffs could revert to their prior national-security baseline — even if only briefly — before being re-applied or adjusted under a different authority. That interim gap is where volatility lives.
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Stocks exposed to this sequencing include Alcoa (AA) and ATI (ATI). Both could sell off on headlines if protection is perceived to weaken, then rebound once tariffs are reinstated under a national-security framework. This is why the setup is short-then-long in sequence, not a one-directional conviction trade.
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The ruling also has important secondary effects. If the Court requires refunds of tariffs collected under an invalid authority, Treasury borrowing would rise, pressuring bond markets and supporting precious metals such as SPDR Gold Shares (GLD) and iShares Silver Trust (SLV).
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Beyond metals, the decision would reshape which sectors remain protected. Tariffs tied to national security — metals, critical minerals, and defense-linked inputs — are most likely to persist or return. Consumer goods are not. Retailers such as Costco (COST) and Walmart (WMT), along with apparel and footwear names like Nike (NKE) and Crocs (CROX), would benefit if non-essential tariffs fall and stay lower. Autos remain more exposed, with General Motors (GM) and Ford Motor (F) facing uncertainty if protection weakens.
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At the index level, the setup favors higher volatility and domestic exposure. The CBOE Volatility Index (VIX) would likely spike on headlines, while the iShares Russell 2000 ETF (IWM) could outperform due to lower import sensitivity.