U.S. officials, foreign governments, business leaders and investors had started to believe that last year’s rapid shifts in U.S. trade policy were largely behind them. That sense of relief has now faded. A recent U.S. Supreme Court ruling struck down key elements of President Donald Trump’s tariff plans, reopening uncertainty just as markets were regaining stability.
The ruling invalidated most of the tariffs introduced last year, concluding that the emergency law used by the administration did not authorize such measures. In response, President Donald Trump announced a new global tariff—initially set at 10% and later increased to 15%—under a separate legal provision. The new levy could remain in place for up to five months while the administration seeks a more permanent solution.
Trade policy uncertainty returns
The latest developments have revived concerns reminiscent of early 2025, when tariff announcements frequently shifted with little notice. Businesses once again face uncertainty over which goods will be taxed, at what rates and from which countries.
Many companies had adjusted pricing strategies and supply chains to cope with higher tariffs. Now they must reassess those plans. Some may rush to rebuild inventories while rates remain unclear. Others could delay hiring, capital investment or expansion decisions until trade policy becomes more predictable.
European Central Bank President Christine Lagarde stressed the importance of clarity in trade rules. She noted that companies need stable guidelines before committing to long-term investment and warned that renewed disruptions could unsettle global markets.
Legal challenges and shifting tariff strategies
The Supreme Court’s 6-3 decision emphasized that emergency powers did not authorize the original tariff measures. However, the administration’s new approach under a different statute may also face legal scrutiny. Some of these mechanisms could require further investigations or even congressional approval, prolonging the uncertainty.
Economists say the lack of a stable trade framework continues to weigh on decision-making. Even if businesses were beginning to adapt to earlier tariffs, the unpredictability surrounding trade policy remains a key risk for hiring, investment and supply chain planning.
Rapid changes in tariff announcements—from cancellation to reinstatement at varying rates—have made it difficult for companies to plan effectively. Without consistent rules, businesses may remain cautious in committing capital or expanding operations.
Impact on inflation, growth and the U.S. outlook
Before the court ruling, U.S. Federal Reserve officials had grown more confident that the inflationary effects of tariffs were beginning to ease. That outlook may still hold in the short term. However, the renewed debate over tariff policy has reintroduced uncertainty into the broader economic picture.
In the near term, effective tariff rates could decline after the court’s decision. Yet they may rise again if the administration successfully implements alternative measures. The timeline for any permanent framework remains unclear.
Despite the policy turbulence, overall economic sentiment has remained relatively positive. A recent survey by the National Association for Business Economics showed that nearly 60% of economists do not expect a recession within the next year. Many also believe that advances in artificial intelligence will boost U.S. productivity over the next three to five years.
Still, economists caution that prolonged uncertainty around U.S. trade policy could weigh modestly on growth. Even if the overall tariff level is eventually restored through other legal channels, the distribution of tariffs by sector and country could change significantly. That variation may create fresh challenges for businesses, investors and households trying to navigate the evolving trade landscape.
