Trump’s Tariffs Could Still Derail Stocks After They Were Blocked

If you think Wednesday’s court ruling on tariffs has made the issue disappear for markets, think again.

On Wednesday night, the US Court of International Trade blocked many of President Donald Trump’s tariffs, including reciprocal tariffs and the 10% baseline tariff, and gave the administration 10 days to comply. That, combined with Nvidia’s earnings beat, put investors in a good mood and sent the stock market rallying early Thursday morning.

A second court on Thursday also blocked the tariffs on behalf of two toy importers in Illinois.

Yet, it might be too early to celebrate the end of the trade war — tariffs are far from being gone, and the latest court order injects a lot more volatility into the market as it pushes closer to its mid-February record high.

Stephanie Roth, chief economist at Wolfe Research, is cautiously optimistic but pointed out that the ruling isn’t likely to move the needle much on the topic of tariffs.

“On the margin, I would say it’s a very modest net positive as the markets have reacted positively, but it’s not a total game changer,” Roth told Business Insider. “And there still are a decent amount of total tariffs that remain in effect.”

Automobile, steel, and aluminum tariffs are still in full force, and Ulrike Hoffman-Burchardi, CIO of global equities at UBS Global Wealth Management, believes these sector-specific tariffs will be much more durable.

“Overall, we believe the court’s decision makes the imposition of tariffs more complex and may harm Washington’s negotiating position in trade talks, but the Trump administration is still able to impose significant and wide-ranging tariffs over the longer-term through other means,” Hoffman-Burchardi wrote in a note Thursday morning.

Trump could strike back

Trump has the tools to reinstate the tariffs that were struck down. Evercore ISI said it expects that the president will quickly turn to alternative means to further his trade agenda, as Section 122 of the Trade Act of 1974 allows the president to impose tariffs of up to 15% for up to 150 days.

Additionally, recent buzz about the TACO trade—short for Trump Always Chickens Out—could force the president to crack down harder, Roth said.

“It might make him want to try to come out to prove that narrative otherwise because he really didn’t like it,” Roth said. “There’s a possibility he attempts to do some sort of surprise.”

Julian Emanuel, senior managing director at Evercore ISI, echoed that sentiment.

“The uncertainty will remain,” Emanuel said in a webinar Thursday morning. “When you think of where tariffs are likely to go, we suspect that he will punch back.”

The bottom line for investors is that they should not take the court ruling as an all-clear signal on tariffs.

“This ruling, even if sustained by the appeals court, does not mean the end of Trump’s tariff policies, but rather a shift to new legal authorities that could be used to replicate many of the same tariffs over time,” Sarah Bianchi, senior managing director and chief strategist of international political affairs and public policy at Evercore ISI, wrote on Wednesday.

Where does the S&P 500 go from here?

Across Wall Street, 6,000 is emerging as the year-end target for the S&P 500, not far from current levels of around 5,900. That means investors should buckle up for a bumpy second half of the year, as the market may have gotten ahead of itself in its rapid recovery from Liberation Day lows.

Hoffman-Burchardi expects to see increased market volatility from headlines on trade and fiscal policy. While UBS expects US stocks to continue rising over the next 12 months, the bank believes short-term gains will be constrained. The bank expects the S&P 500 to end the year at 6,000, and potentially hit 6,400 by June 2026.

The S&P 500 is still quite expensive at current levels, in Emanuel’s opinion.

“The approach to 6,000 seems a little overdone to us,” Emanuel said. “We continue to think we’re going to get new all time highs, but likely an end-of-year or 2026 event.”