The decision effectively repeals nearly half of the current tariff regime, including reciprocal tariffs on Canada, Mexico, and China, sparking a complex reaction in the stock and bond markets.

While this decision provides an immediate respite for importers, it does not completely eliminate the possibility of future tariffs. President Trump has already announced a new global tariff of 10%. While this may look like a complete victory for free trade, LPL Chief Equity Strategist Jeff Buchbinder warns that the reality is much more complex.

8 Takeaways from the Supreme Court's Tariff Decision

1. Short-term boost for corporate America

Think of it as a random stimulus package. Since the IEEPA was the basis for about half of the Trump administration's tariffs, these costs are effectively disappearing overnight. For companies that were preparing for double-digit tariff rates, this is a sudden "tax cut" that should provide a healthy boost to profitability in the coming weeks.

2. The relief may not last long

Don't get too comfortable. President Trump has already made it clear that he is moving towards other laws, such as Section 122 or Section 301, to recover these taxes. LPL believes that up to 90% of these "illegal" tariffs may be restored by the summer. In other words, the tariffs are still there; they're just getting a legal makeover.

3. Uncertainty still reigns supreme

Although we have a court decision, we don't have complete clarity. Markets are now concerned about whether the government will actually be forced to return the billions already collected. Additionally, it's unclear how this affects our trade agreements with neighbors like Canada and Mexico, although the USMCA should protect these relationships from the worst consequences.

4. Inflation won't change significantly

If you were hoping for a significant drop in food or electronics prices, you may be disappointed. Strategists note that tariffs did not cause the inflation spike feared when they were imposed, so their removal won’t bring prices down much either. At best, we may see inflation drop by just a few tiny fractions of a percent.

5. The Fed probably won’t change course

The Federal Reserve is not expected to be either overjoyed or panicked. On the one hand, the removal of trade friction helps the economy grow; on the other hand, it removes price pressure that could slow things down. Since these forces offset each other, expect the Fed's rate-cutting trajectory to remain largely unchanged, although the US dollar may lose some of its recent strength.

6. Don't chase the "tariff losers" rally

You may see clothing retailers or automotive companies' stocks jump on this news, but LPL suggests you should "buy the rebound." Since replacement tariffs are already in the works, this relief rally is likely to be a trap. Instead, look for construction companies, industrial firms, or semiconductor stocks that have a better chance of preserving their profits.

7. The Treasury is under pressure

The government already has a massive deficit of \$1.8 trillion, and the loss of tariff revenue is only exacerbating the situation. To compensate for the lost money, the Treasury will likely have to borrow more by issuing more short-term notes and bills. This additional debt supply could eventually push interest rates (yields) higher, even if only slightly.

8. The $175 billion refund cliff

This is the biggest "if" in the report. If lower courts decide that the government should refund the $175 billion in tariffs it collected illegally, the U.S. will have to find the money quickly. Financing such a massive return will require even more government borrowing, which could lead to a "steeper" yield curve as the government struggles to return money to importers.