The U.S. Supreme Court rules that Trump's tariffs are illegal. Automobile retail and apparel stocks rose in response.

The Supreme Court of the United States has made a key ruling on the tariff policy of the Trump administration. On Friday local time, the Supreme Court of the United States ruled that President Trump's practice of imposing tariffs on a large scale during his second term was illegal, stating that his imposition of tariffs on dozens of trading partners under the International Emergency Economic Powers Act (IEEPA) had exceeded the president's statutory authority. This ruling is seen as a milestone denial of the core pillar of Trump's economic policy in his second term. The Supreme Court explicitly stated in its opinion that the key issue to be judged by the court is whether the president's power to "regulate imports" under IEEPA includes the power to impose tariffs, and the answer is "no". The court emphasized that the relevant laws do not give the president the unilateral and broad authority to impose tariffs. The case was brought by several American business groups and later gained support from 12 state governments. The plaintiffs argued that the tariff measures implemented by the Trump administration had caused substantial harm to business operations and the economy within states. When Trump returned to the White House last year, he vowed to use tariffs to reshape the global trading order and correct what he called the unfair treatment of the United States for decades. In April of last year, he announced a new tariff system on the so-called "Liberation Day", causing turmoil in the financial markets for weeks and widespread concern among U.S. allies. Although Trump later made concessions on some of the most stringent tariff measures, as of the end of 2025, the effective tariff rate in the United States still exceeded 10%, reaching the highest level since World War II. Meanwhile, U.S. stocks have gradually rebounded over the past few months and repeatedly hit new highs, but various opinion polls show that many Americans believe that the tariff policy is harming the country's economy. After the ruling was announced, the overall market reaction was relatively restrained, but individual stocks showed differentiation. The stock prices of large retailers, as major importers in the United States, fluctuated, with Walmart Inc. (WMT.US) falling by 1.8% and Home Depot, Inc. (HD.US) rising by 1.2%. Costco (COST.US), which had previously sued the Trump administration and requested the return of tariff costs, fell by 0.4%. Stocks related to automotive retailing generally strengthened, with Cars.com (CARS.US) rising by 2% and Penske Automotive Group, Inc. (PAG.US) rising by 3%. The stock prices of companies in the clothing industry also rose, with NIKE, Inc. Class B (NKE.US) rising by more than 2.6%, Lululemon Athletica (LULU.US) rising by more than 2%, and Under Armour (UAA.US) rising by more than 3.5%. On the political front, Democratic lawmakers swiftly welcomed the ruling. Richard Neal, the chief Democratic member of the House Ways and Means Committee, said the ruling was a "victory for the American people, the rule of law, and America's standing in the global economy." In his statement, he emphasized that the power to legislate on trade belongs to Congress, and the constitutional position is very clear that no president can create powers that do not exist. From a market perspective, the immediate impact of this ruling on the financial markets is limited. The US dollar index briefly declined before quickly stabilizing, and the S&P 500 index and the NASDAQ Composite index rose before falling back. According to the prediction platform Kalshi, the market currently believes that the probability of the court ordering Trump to return the tariffs by July 2026 is 66%, a significant increase from the previous 30% or so.