How the Supreme Court tariff ruling tests Fed independence

Core Insights - The economic burden of the 2025 tariffs is primarily borne by U.S. firms and consumers, with estimates indicating that 90% of the costs are passed on to them [1][7][3] - The Supreme Court ruled that President Trump's tariffs were illegal, which may lead to significant financial implications for the U.S. government, including potential refunds of approximately $168 billion [4][21] - The ongoing tariff dispute highlights tensions between the Federal Reserve's independence and political influence, particularly from the Trump administration [5][11][20] Tariff Impact on Consumers and Businesses - A study from the Federal Reserve Bank of New York found that nearly all (90%) of the costs associated with high tariffs are absorbed by American consumers and businesses [7][2] - The Congressional Budget Office estimates that 30% of the 2025 tariffs will be absorbed by businesses, while 70% will be passed on to consumers [1] Political and Legal Context - The Trump administration's response to the Supreme Court ruling included the announcement of new tariffs, raising a global tariff from 10% to 15% shortly after the ruling [21] - Federal Reserve officials have expressed concerns about the administration's attempts to influence monetary policy and undermine the Fed's independence [5][11] Market Reactions and Future Projections - The New York Fed's tariff study reinforces the Fed's independence and suggests that its economic assessments are based on data rather than political pressure [20] - Analysts predict that the Fed may hold off on aggressive interest rate cuts in the first half of 2026, despite ongoing economic pressures [22]