Summary of US Trade Policy Developments and Market Impact

Author: Muhammad Umair

Published: February 22, 2026

Key Points

• The U.S. Supreme Court ruled that President Trump exceeded his authority in imposing global tariffs under the International Emergency Economic Powers Act (IEEPA).
• The ruling does not alter the overall protectionist direction of U.S. trade policy, maintaining market uncertainty.
• The U.S. dollar is consolidating below key resistance levels, while gold remains supported above $4,400.
• Equities are showing a bullish structure amid ongoing tariff and legal uncertainties.

Supreme Court Ruling

The Supreme Court's 6-3 decision limits President Trump's ability to impose broad tariffs without Congressional approval, directly impacting his economic policy aimed at using tariffs to adjust trade balances and support domestic industries. This ruling shifts market focus from past tariff legality to future policy directions.

Administration's Response

In response to the ruling, Trump quickly enacted a temporary 10% tariff on imports from nearly all countries for up to 150 days under Section 122 of the 1974 Trade Act. This indicates a continued commitment to tariffs as a macroeconomic tool, despite the legal challenges.

Existing tariffs on specific industries, such as steel and aluminum, remain unaffected, preserving the protectionist stance of U.S. trade policy.

Market Implications

The ruling introduces a dual dynamic: it reduces the risk of sudden tariff shocks while simultaneously allowing for continued aggressive trade measures through alternative legal frameworks. This creates a complex environment for investors as they assess the implications of new tariffs and potential exemptions on various sectors.

Currency Outlook

The U.S. dollar's outlook is complicated by the new tariffs, which may support the dollar in the short term due to tighter trade conditions. However, legal uncertainties and potential litigation regarding tariff refunds could introduce volatility. The USD index is currently consolidating between 100.50 and 96.50, with a break below 96.50 indicating further downside potential.

Equity Market Response

The S&P 500 index is experiencing a constructive but rotational market sentiment. The court ruling alleviates some extreme downside risks associated with unchecked tariffs, yet the announcement of new tariffs raises concerns about input costs and corporate margins. Domestic industries may benefit from protectionist policies, while multinational companies could face challenges.

Commodity and Yield Outlook

Commodity markets are likely to react to selective tariff exemptions, which could prevent supply chain disruptions. Gold prices are expected to remain elevated due to ongoing policy uncertainty and weak consumer sentiment. Treasury yields are anticipated to remain range-bound as inflation expectations fluctuate in response to tariffs and legal challenges.

Conclusion

The Supreme Court ruling has not ended the tariff narrative but has altered the legal landscape. Protectionist policies persist through alternative legal avenues, maintaining trade uncertainty across markets. Investors should prepare for volatility driven by ongoing trade policy developments, with defensive assets likely to remain in demand.