Trump's tariffs look for a rebound
Al Drago/Bloomberg
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Call it De-Liberation Day.
The Supreme Court blocked a significant chunk of President Donald Trump's sweeping tariff policy on Friday. But instead of closing the chapter, it's opened an entirely new book that no one seems to understand.
Let's break it down:
Return of the tariffs. Despite the setback, the president isn't backing down. This weekend, he announced plans to impose a 15% "worldwide" tariff. That's thanks to Section 122, which allows him to briefly implement tariffs broadly. However, they can only remain in place for up to 150 days. Ultimately, he'll likely need to work with Congress for something more permanent.
The refund issue. One of the biggest questions is what happens to the $133 billion in taxes collected from the struck-down tariffs. More than a thousand companies preemptively filed lawsuits to claw back that money.
The process isn't as simple as the US government cutting a check. It's bound to get messy and involve lots of lawyers. Companies will also need to weigh the benefits of fighting for a refund against the risks of angering the current administration.
Some Democrats are calling on the administration to issue $1,700 refunds directly to Americans. Shoppers shouldn't expect the ruling to mean prices are coming down soon, Goldman Sachs says.
Market reaction. It's a double-edged sword for investors. The ruling is likely to set a legal precedent that'll make it harder for the administration to impose larger tariffs than before. That's good for most businesses. Companies hit with tariffs could also get refunds, which would serve as a nice cash infusion.
On the other hand, lowering tariffs and the revenue they generate puts the spotlight firmly on the federal government's growing pile of debt. That could push bond yields higher and weigh on stocks.
Jefferies mapped out some consumer stocks that could benefit.
The broader economic impact. Since tariffs will remain in some form, it's tough to make a definitive statement. However, the most recent data from the past year shows a clear trend: The economy is growing, but not everyone is benefiting.
It's worth considering that a lot of the dire economic predictions people had about Trump's policies haven't materialized. A think tank offered reasons that's the case.
So who comes out on top? Even with so much still up in the air, we identified some potential winners and losers from the latest shake-up. (Hint: Lawyers are going to be just fine.) Meanwhile, many COOs are likely pulling out their hair from the tariff whiplash affecting their supply chains.
We'll get more clarity on Tuesday night during Trump's first State of the Union of his second term. Just don't expect a warm welcome for some of the Supreme Court justices.