The U.S. Supreme Court voided a broad set of tariffs, raising new uncertainty over a shifting trade landscape and its impact on the global economy. With more policy shifts likely to come, the implications for trade and markets remain dynamic.

In this webinar, experts from PGIM’s macro and investment teams discuss how the Supreme Court’s decision may affect tariffs, the economy, and capital markets. The following is a summary of the conversation.

• Reaction in Washington: Following the court ruling, the Trump administration moved to implement a 15% tariff on all imports for a period of 150 days under a separate statute. This would bring the overall U.S. effective tariff rate slightly below its previous level, but it would remain at its highest mark since the 1930s. Beyond this five-month period, there is a long tail of uncertainty. It will take years to litigate potential refunds from the previous tariff regime, and any refunds moving forward would be subject to administrative delays. Trade policies and affordability challenges may make legislative action on tariffs unlikely this year.
• Economic impact: The net impact to the macro outlook is relatively small. The removal of IEEPA tariffs is a modest tailwind for growth that will ease inflationary pressure. It thus gives the Federal Reserve more leeway to reduce interest rates. However, federal revenues will take a hit, and uncertainties (both legal and policy) will persist. It’s also important to assess the broader economic environment. The One Big Beautiful Bill (OBBB) included fiscal stimulus measures, including tax relief, that will begin to take hold later this year. The AI-led capex supercycle—coupled with the ensuing wealth effect—is contributing to a strong underlying growth environment, especially in the U.S. AI spending and lower policy rates are tailwinds for a variety of business sectors. Policy uncertainty is high, but trade deals and memorandums of understanding (MOUs) that were previously struck are unlikely to unravel given the geopolitical ramifications.
• Implications for portfolios: Tariffs increase company dispersion by amplifying the sector and issuer specific effects of asymmetric cost impacts. A dynamic backdrop favors deep fundamental analysis and active portfolio management. Larger, diversified firms with strong cash flows, flexible or localized supply chains, and the ability to pass through costs are better positioned to absorb volatility. Consumer companies whose supply chains have significant exposure to southeast Asian markets (where tariff rates were 20% or higher) will likely see margin relief once they work through existing inventory. Meanwhile, companies with concentrated supply chains, limited pricing power, high import dependence, and weaker balance sheets are more vulnerable. Importantly, tariff policy has been in flux for nearly a year, giving both companies and markets time to identify positives and negatives, with uncertainty and shifting rules in some ways representing the primary business challenge rather than tariffs themselves. Zooming out, tariff considerations should be viewed within the context of a healthy macro environment amid an AI-driven capital investment supercycle and potential policy support in a midterm election year, which may limit tariff impacts to episodic disruptions rather than a sustained economic drag. In addition, without a more permanent tariff structure to replace it, the expiration of the new 150-day levy could provide a market catalyst in the second half of the year.