Sector moves have been selective. Retail stocks like Walmart and Nike could gain if import costs drop, while automakers are unlikely to benefit due to Section 232 coverage. Bank of America expects stronger Q4 performance from consumer names if tariff relief aligns with inventory build cycles.
Is the Bond Market Underpricing Fiscal Risk?
With tariffs generating roughly $28 billion in July alone, any unwind could hit U.S. revenue. Pimco warned that if refunds are issued or revenues fall, Treasury issuance would rise, potentially pushing 10-year yields past 4.5%. That could derail soft-landing bets and pressure equity valuations.
Barron’s also flagged the legal ruling as a “sleeper risk” to bond markets. However, Morgan Stanley sees room for rates to fall regardless. Their team projects the Fed will cut rates steadily through 2026, driving the funds rate to 2.25%, especially if lower tariffs cool inflation.
Will the Supreme Court Reinforce Executive Trade Powers?
Legal consensus leans toward a Trump-favorable outcome. Citi assigns a 70% chance the Supreme Court overturns the lower court, preserving broad presidential trade authority. Brookings’ Amanda Steinberg highlighted the Roberts Court’s pattern of upholding national security-based executive actions.
Still, some analysts note rising corporate and political resistance to sweeping tariffs—even if upheld legally. Future trade policy may be narrower and more legally insulated.