Warren Buffett has never claimed to have the ability to predict short-term market movements. Aligning with this philosophy, no one can know for sure where the stock market will head in the next month or year. However, market attention is focused on Wednesday, January 14, 2026, when the U.S. Supreme Court is expected to announce a series of rulings, which may include a decision on the legality of President Donald Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) to impose global tariffs. This ruling is considered likely to trigger significant volatility in the stock market.
The core of this legal challenge revolves around three main points. First, the U.S. Constitution clearly assigns the power to levy taxes to Congress, and tariffs are essentially a form of taxation. Second, the text of the IEEPA, cited as the basis for the tariffs, does not mention the word “tariff.” Finally, the act authorizes presidential action only during a state of emergency, and opponents argue that the tariffs lack justification by an emergency. Previously, two lower federal courts have ruled against the government, and data from the prediction market Polymarket indicates a 72% probability that the Supreme Court will uphold these rulings. President Trump has stated on social platforms that this case concerns national security, but some perspectives emphasize that the ruling is crucial for upholding the principle of separation of powers within the U.S. government.
If the Supreme Court rules to overturn the tariffs, the stock market could receive a boost. A Supreme Court declaration that the tariffs are illegal could be the fastest way to stimulate the job market, which is typically positive for stocks. Specifically, companies that import large quantities of goods from China, such as Mattel (MAT) and Nike (NKE), as well as those heavily reliant on U.S.-China trade routes like United Parcel Service (UPS), could directly benefit. Even stocks less directly tied to imports might rise, as reduced tariffs could help alleviate inflation concerns and potentially provide the Federal Reserve with greater room to cut interest rates, thereby broadly benefiting businesses.
However, investors should not be overly optimistic. Even if the tariffs are overturned, any resulting market boost might be short-lived. Treasury Secretary Scott Besant has noted that the government could use other statutes, such as Section 301 of the Trade Act of 1974, to “rebuild” a tariff structure. While this act authorizes tariffs when unfair trade practices by other countries are identified, it also has its own limitations and may not fully achieve the broad-based tariffs the administration desires. It is certain that if the ruling goes against the White House, it will likely be followed by new rounds of maneuvering over tariff measures. Therefore, the sustainability of any stock market rally triggered by a favorable ruling may be put to the test.
