SCOTUS Ruling, Tariff Tango & Econ Politics - February 23rd, 2026
Takeaway #1: No surprises
Perhaps the biggest surprise from Friday’s historic Supreme Court ruling striking down President Trump’s “Liberation Day” tariffs, is that there really weren’t any surprises. In my Top 3 Takeaways from November 6th, following the Supreme Court hearing on President Trump’s tariffs I said this: The imposition is taxes on Americans and that has always been a function of congress. It’s a direct quote from Chief Justice John Roberts in yesterday’s tariff hearing. And he said it in direct response to his line of questioning of Trump’s SG. In other words, when tariffs are used for purposes of revenue collection as opposed to serving emergency functions – you have a tax which is a function of congress. As I went on to say that day... Effectively if the Supreme Court lets the current broad authority of President Trump’s tariff’s stand, there would be effectively anything that a future president could deem to be an emergency – including his example of a climate emergency which many on the left would be quick to do – and then effectively impose any penalty they see fit to attempt to kill a particular industry in this country. It’s an illustration of the double edge sword and the point was illustrated extremely well. What I took away from the tariff hearing yesterday is two-fold. First, it’s not a question as to if President Trump will lose his tariff case. It appears likely that he will – the question is the margin of the split. I think a 6-3 ruling against the tariffs is very likely. And that’s exactly what happened. As I’m inclined to say, I’ve not made a career out of being wrong. So, the question then becomes...
Takeaway #2: What does this mean to you?
Something else I’ve consistently said is that I’m not a “tariff person”. Of all of President Trump’s policies, his aggressive use of tariffs is the one I differ the most with him on because imposed tariffs do lead to higher prices. In my most recent analysis of this in January, I brought you this: The most recent inflation rate was 2.7%. Effectively without the Trump tariff policy the inflation rate would be cut to only about 1%, or actually where it was for most of his first term when the economy took off and quality of life steadily improved for the average American preceding the pandemic. What that would also allow for is the Federal Reserve to cut interest rates by at least another 2% from current levels which would also aid affordability. The economic calculation right along is whether the foreign policy effects of the Trump tariff policy were worth a slightly higher cost of living but also with more U.S. manufacturing and jobs. Looking around the economy today, and with affordability concerns that are still the top concerns for most Americans, if they had a vote, they’d almost certainly vote for whatever would net a lower cost of living regardless of the ancillary effects. Now this is where it gets more complicated... As I breakdown in today’s Q&A – based upon the tariffs that were struck down by the Supreme Court and the reimposed tariffs by President Trump Friday night and Saturday morning... Before the IEEPA tariffs were struck down, the overall average effective tariff rate for imports was 19.6%. Immediately following the SCOTUS ruling, the rate fell to 9.1%. After the 10% across-the-board tariffs were imposed Friday night, the rate rose to its current level of 13.0% for at least the next 150 days. Complicating matters, on Saturday President Trump announced the tariff rate would be 15%. Adjusting for that adjustment, the net effective rate should be 14.95%. Therefore, the net effective impact in real-time is that approximately 24% of imposed tariffs were eliminated by Friday’s Supreme Court ruling. Got all of that? The bottom line in this fluid situation is that the impact of tariff collections will be just under a quarter of what it was before. Or in other words...a potential cost savings of approximately $288 per household on an annualized basis. That’s independent of any potential legal outcomes from what’s sure to be a litany of litigation stemming from Friday’s SCOTUS ruling. While many of President Trump’s trade deals are now in question, as commonly they hinged on his ability to impose ‘reciprocal’ tariffs – the outcome on Friday holds the potential to work as an economic tailwind of sorts for his administration during this important midterm election year which is needed because of...
Takeaway #3: Shutdown politics
Friday’s tariff ruling dwarfed what otherwise was an instructive and important economic report on Friday. After President Trump’s first two full quarters produced GDP growth averaging a booming 4%+ growth rate – including the third quarter checking in with a growth rate of 4.4%. That looks like a distant memory following Friday’s 4th quarter report, however. Dogged by the longest partial government shutdown in history – growth fell to a paltry 1.4% rate to end the year. While that shutdown was temporary, what wasn’t was the shutdown culture as the current DHS partial government shutdown is impacting approximately 13% of the federal government. The Atlanta Federal Reserve’s GDP Now calculator currently estimates a strong 3.1% growth rate for the first quarter of this year. However, with no clear end in sight to the DHS partial shutdown currently in place it’s possible that rate is further suppressed as well. It’s possible this is part of the political calculation by Democrats. If partial government shutdowns are impairing U.S. economic growth, they may be content to continue to play the game believing Americans will attribute mediocre economic growth to Trump’s policies as opposed to their obstruction. Just imagine what might happen if Democrats control congress following this year’s midterm elections? How the politics of these shutdowns play is something important to watch from here.