Wall Street, Corporate America brace for more tariff turmoil

Core Viewpoint - Wall Street is preparing for potential turmoil due to an upcoming Supreme Court decision regarding the constitutionality of tariffs, which could impact Corporate America and raise concerns about the country's fiscal health [1]. Group 1: Market Reactions and Expectations - The decline in asset prices in early April, following President Trump's tariff announcements, indicates potential market volatility if the Supreme Court overturns the current tariff regime [2]. - Despite the Supreme Court hearing the case expeditiously, a ruling may take a month or longer, with the current term ending on June 6, 2026 [3]. - Upholding the tariffs would maintain the current market status quo, while reversing them could introduce significant uncertainty, which markets typically dislike [4]. Group 2: Potential Financial Implications - A ruling that tariffs are unconstitutional could lead to substantial one-time refunds for companies, potentially amounting to $100 billion, but this may be countered by increased uncertainty and political/legal challenges [4]. - Trade uncertainty could lead businesses to pause investments and freeze hiring, which may result in declines in U.S. stock indexes and widening credit spreads [5]. - Financial markets have adjusted to the impacts of tariffs on inflation, economic growth, and asset prices, indicating a level of acceptance among market participants [5]. Group 3: Legal Context - The Supreme Court case revolves around whether President Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA) when imposing tariffs, complicating investor analysis of potential market reactions [6].