The Supreme Court just struck down President Trump’s tariff policy. Now what?
The Sandbox Daily (2.23.2026)
Welcome, Sandbox friends.
Today’s Daily discusses:
Supreme Court strikes down President Trump’s tariff policy
Let’s dig in.
Blake
Markets in review
EQUITIES: S&P 500 -1.04% | Nasdaq 100 -1.21% | Russell 2000 -1.61% | Dow -1.66%
FIXED INCOME: Barclays Agg Bond +0.20% | High Yield -0.16% | 2yr UST 3.440% | 10yr UST 4.031%
COMMODITIES: Brent Crude +5.45% to $71.44/barrel. Gold +3.27% to $5,247.1/oz.
BITCOIN: -4.87% to $64,898
US DOLLAR INDEX: -0.07% to 97.723
CBOE TOTAL PUT/CALL RATIO: 0.90
VIX: +10.06% to 21.01
Quote of the day
“If people weren’t wrong so often, we wouldn’t be so rich.”
- Charlie Munger
Supreme Court strikes down President Trump’s tariff policy
After nearly a year of trade policy uncertainty, the Supreme Court’s ruling last week that recent tariffs are unconstitutional has reset the policy landscape once again.
Yet, as is often the case in Washington, when one chapter closes, another opens. President Trump has already signaled a switch to an alternative legal framework for tariffs, and markets are still digesting what this means for trade policy, corporate earnings, consumer spending, and investment portfolios.
For investors, the most important takeaway is not the legal ruling itself, but what the past year shows about the importance of staying invested. While markets can experience swings during periods of policy uncertainty, they can also stabilize and recover when investors least expect it.
Tariffs will likely continue to drive headlines, so having a clear understanding of the events of the past year can help long-term investors maintain perspective as the next chapter unfolds.
A year of tariff volatility
To understand the implications for markets, it helps to understand what this ruling means.
Presidents have several legal tools available to impose tariffs, each with different rules around rates, duration, and scope.
The reciprocal tariffs announced on “Liberation Day” last April were justified under the International Emergency Economic Powers Act, commonly known as IEEPA. This law from 1977 grants the president broad authority to regulate commerce in response to a declared national emergency. In this case, the stated emergency was the country’s persistent trade deficits with many nations, illegal drug trafficking, and immigration.
Here is a short summary of the main events:
• On April 2, 2025, the initial announcement included a baseline 10% tariff on virtually all trading partners, with higher country-specific rates layered on top. The immediate market reaction was sharp, resulting in a correction across major indices.
• Then, on April 9, 2025, the administration announced a 90-day pause on the country-specific increases, leaving only the baseline rate in place. The markets began to rebound almost immediately, and rose to new all-time highs in just months. Trade deals were subsequently struck with individual countries and regions.
• On February 20, 2026, the Supreme Court ruled that the administration lacked the authority to impose sweeping global tariffs under IEEPA. The ruling reaffirmed Congress’s central role in setting trade policy.
Tariffs aren’t going away
The administration has prepared for this ruling, and it has already explored various other avenues to pursue tariffs without IEEPA.
So, following the Supreme Court ruling last week, the administration quickly implemented tariffs under a different statute, Section 122 of the Trade Act of 1974.
This law was chosen over other options because it can be used against a number of countries at once, and does not require long investigations and reports that could take months.
Specifically, Section 122 allows the president to impose tariffs of up to 15% for a period of 150 days, without requiring Congressional approval.
The spirit of this law was to allow presidents to respond to trade imbalances and threats without completely bypassing Congress. Historically, when the dollar was still backed by the gold standard, there were periods when this law was needed to protect the dollar.
This means that although some of the higher tariff rates introduced in 2025 may be rolled back, and the new tariffs may not last more than several months, tariffs are likely to remain an active policy tool.
There are other areas of uncertainty, including if and how refunds will be made. Courts must still determine whether businesses that paid tariffs under the IEEPA framework are entitled to refunds, and whether individual Americans would be included in any reimbursements. In the worst case, it could be years before there is clarity.
The economy does not always follow textbook theory
Economics is sometimes called the “dismal science” since it has a poor track record of predicting the response to major policy shocks.
When tariffs were raised to their highest levels since the Great Depression, many feared demand destruction, rising inflation, a strengthening dollar, and struggling markets.
Why did this not fully materialize?
1st, the level of tariffs changed quickly and repeatedly. The 90-day pause announced just one week after Liberation Day dramatically reduced the effective tariff burden on most trading partners. The highest announced rates never truly went into effect except with a few trading partners.
2nd, companies responded by stockpiling imported goods well ahead of the April deadlines. This was clearly visible in the trade data, which showed a significant spike in imports in the first quarter of 2025 as businesses front-loaded purchases.
3rd, and perhaps most importantly for markets, the underlying fundamentals of the economy remained solid. Inflation has continued to moderate, real economic growth (GDP) grew at a healthy 2.2% pace for all of 2025, and corporate earnings remain robust – all of which support valuations and long run growth.
Of course, this is not to say that tariffs had no impact. The federal government collected hundreds of billions of dollars in tariffs which were paid by both consumers and businesses.
But the experience of the past year is a reminder that economic outcomes are rarely as straightforward as the headlines suggest, and that is why it’s important investors do not react to worst-case scenarios.
Bottom line?
The clearest lesson from the past year is one that applies to virtually every other period of market and policy uncertainty: the best thing investors can do is stay invested.
Trying to predict the precise effect of tariffs on the economy and markets is not only difficult, but counterproductive to your goals.
Sources: Clearnomics, J.P. Morgan
That’s all for today.
Blake
Questions about your financial goals or future?
Connect with a Sandbox financial advisor – our team is here to support you every step of the way!
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
Please see additional disclosures (click here)
Please see our SEC Registered firm brochure (click here)
Please see our SEC Registered Form CRS (click here)