What does it mean if the U.S. High Court’s tariff ruling “defends again” today?

**Source**: Wall Street Insights

**By**: Dong Jing

Wall Street analysts believe that if the ruling is delayed until late February, the probability of Donald Trump winning the case will increase. Some strategists warn that each week of delay adds to the likelihood of the Trump administration prevailing. Currently, betting markets indicate his chances of winning stand at only 28-32%. If the court rules the tariffs illegal and orders a refund, the amount involved could reach "hundreds of billions of US dollars", which would deal a major blow to the U.S. fiscal position and bond market.

The U.S. Supreme Court has signaled that it may issue an opinion at around 10 a.m. Eastern Time on Wednesday (11 p.m. Beijing Time on Wednesday), reigniting market speculation that a key ruling on the tariffs is imminent.

Markets had held similar expectations last Friday, but according to CCTV News, on January 9 local time, the U.S. Supreme Court stated that it would not issue a ruling on the global reciprocal tariffs imposed by the Trump administration under the *International Emergency Economic Powers Act (IEEPA)* that day.

The widespread focus in the market is that if Chief Justice John Roberts and his colleagues continue to postpone the release of the ruling on the IEEPA tariffs, it may signal a subtle shift in the court's stance.

Analysts point out that if the ruling is delayed beyond late February, the legal scales that originally seemed tilted against the Trump administration could tip in its favor. While institutions like Evercore ISI still maintain their baseline view that Trump is likely to lose the case, they also warn that each week of delay increases the probability of the Trump administration winning.

This ruling carries significant potential implications for the market. Some strategists are concerned that the removal of tariffs would introduce uncertainty and weigh on stock markets, while others argue that it would boost economic growth.

In addition, if the court rules the tariffs illegal and orders a refund, it would deal a blow to U.S. public finances. Trump has warned on social media that the amount involved could be "hundreds of billions of US dollars" in compensation, describing it as "total chaos".

### The Signal of a Delayed Ruling: The Scales May Be Tilting in Trump's Favor

Analysts including Sarah Bianchi of Evercore ISI noted in a report that while the Supreme Court adheres to its own schedule, the court is well aware of the significance of this case, leading them to originally expect a decision in the near term. However, if the Supreme Court fails to rule on the case by the end of February, it could be a positive sign for Trump and tariff supporters.

Once the ruling is pushed into late February or later, the likelihood of the court ruling against the government will decrease, mainly due to the timeliness and fiscal impact of the issue.

Analysts Amy Ho and Joyce Chang of JPMorgan share a similar view. They stated in a report that while legal experts still widely expect the Supreme Court to rule that the president exceeded his authority in imposing tariffs under the emergency powers granted by the IEEPA, it is worth noting that each week the Supreme Court delays its decision, the probability of the Trump administration winning increases.

Furthermore, JPMorgan analysts put forward another possibility: if the ruling is postponed until February, it may indicate that the Supreme Court views this case as a "blockbuster case" on par with the *Affordable Care Act*. Ho and Chang pointed out:

Historically, the court has tended to reserve its most impactful rulings for release at the end of its term in June to allow for extended deliberations. As evidence, the two previous rulings on the Affordable Care Act were both issued in June.

Notably, market strategists are currently divided on how the court's ruling will impact the market.

Some forecasters argue that the repeal of IEEPA tariffs would mean greater uncertainty, thereby pressuring stock markets; others contend that the elimination of import taxes would boost economic growth and equity markets.

Beyond the stock market, another key factor lies in the justices' stance on tariff refunds. If the court rules against Trump, whether to order a refund of the tariffs already collected will become a focal point.

Analysts point out that this is crucial for the bond market, as S&P Global Ratings maintains the U.S. sovereign credit rating and stable outlook partly based on expected tariff revenues.

### Trump Warns of Negative Consequences of the Ruling

Currently, data from betting markets show that the probability of Trump winning the case is not high. Kalshi recently put his chances at 32%, while Polymarket pegged it at 28%.

This decline in expectations stems largely from the oral arguments on November 5, when questions from some conservative justices to Trump's lawyers were deemed particularly skeptical.

Although Evercore still predicts that Trump is more likely to lose the case, it expects the government to be prepared to replace most of the IEEPA-based tariffs with other authorizations.

For example, Trump previously imposed import taxes on the steel, aluminum, lumber and other industries under different laws, and these sector-specific tariffs are not within the scope of the current case.

Trump himself has issued stark warnings about the consequences of a potential loss. Opponents have emphasized that the text of the IEEPA does not explicitly mention tariffs, and no president has ever used the law to impose tariffs before. In response, Trump argues that if the Supreme Court strikes down these tariffs, the U.S. economy will suffer a severe blow.

He reiterated this position in a social media post on Monday and expressed concerns about potential tariff refunds. Trump stated:

"If for any reason the Supreme Court rules against the United States on tariffs, the actual amount we would need to repay would be hundreds of billions of US dollars."

He added that this figure does not yet include the "paybacks" demanded by countries and companies that invested in building factories and equipment to avoid the tariffs. Trump concluded that this would create "total chaos, which our country would almost certainly be unable to afford".

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