U.S. stock indices saw positive movement following a landmark ruling from the Supreme Court, which declared the tariffs imposed by former President Donald Trump as illegal. The decision, passed by a 6–3 vote, may obligate the U.S. government to reimburse approximately $175 billion to importers who sought judicial protection, although the exact amount remains uncertain. The Court ruled that Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) was an overreach, as it lacked congressional approval.
In a reaction to the ruling, President Trump expressed his disappointment and announced plans for an executive order that would impose a new 10% global tariff. During a White House briefing, he indicated that despite the Court’s decision, he was determined to explore alternative legal avenues to implement tariffs without legislative support. This move introduces considerable political uncertainty, marking a setback for the administration’s trade objectives. Trump’s legal team may turn to Section 122 of the Trade Act of 1974, but such tariffs can only last for 150 days unless extended with congressional consent.
Despite this tension, Trump reiterated that tariffs under Sections 232 and 301, which impact steel, aluminum, and semiconductors, will remain in effect due to national security concerns. Industries such as automotive, pharmaceuticals, and consumer goods are likely to continue facing challenges from these persisted trade barriers.
Market reaction to the Supreme Court’s ruling was broadly optimistic, seeing the potential removal of tariffs as a disinflationary measure. Economists predict that easing import taxes could alleviate ongoing price pressures affecting the economy. Following the ruling, the S&P 500 rose 0.69% to 6,909 points, the Dow Jones advanced 0.47% to reach 49,625 points, and the Nasdaq 100 increased by 0.87% to 25,012 points.
In related economic news, the Bureau of Economic Analysis (BEA) reported that U.S. GDP growth slowed to 1.4% in the fourth quarter from 4.4% in the previous quarter, falling short of the 3% forecast. The report attributed this slowdown to the recent prolonged government shutdown. At the same time, the BEA released the December PCE Price Index, which showed an increase in inflation, with the headline PCE rising from 2.8% to 2.9% and the Core PCE Price Index moving from 2.8% to 3%, both exceeding expectations.
Despite stagnant growth paired with rising inflation, equity markets remained resilient, with investors prioritizing the implications of the tariff ruling for future price stability. The U.S. Dollar Index (DXY) saw a slight decline of 0.03%, closing at 97.79 points.
Over in Japan, inflation rates sharply decelerated, easing pressures on the Bank of Japan (BoJ). The Ministry of Internal Affairs and Communications reported that the annual inflation rate fell from 2.1% in December to 1.5% in January—the lowest since April 2022. Core inflation also decreased from 2.4% to 2.0%. This disinflationary trend gives the BoJ room to navigate between maintaining price stability and supporting government efforts for economic stimulation through public spending and tax reductions. Following the inflation report, the Japanese yen gained slightly against the U.S. dollar, valued at 154.98, while the Nikkei 225 dropped by 1.12% to close at 56,825 points.
