Elev8 Market Update: Legal Setback, Temporary Tariffs, Ongoing Uncertainty

Decision on Tariffs

Chief Justice John Roberts wrote that the IEEPA of 1977 does not give the president the right to levy taxes or tariffs, because that power belongs to Congress under the Constitution. The ruling was a clear setback for the administration, which had used IEEPA as the main tool for its broad tariff policy.

Yet only hours later, President Trump invoked Section 122 of the Trade Act of 1974, allowing him to introduce a 10% temporary tariff on imports, starting 24 February, signalling that he may later raise it to 15%, the maximum permitted under that law. This quick move restores the effective U.S. tariff rate to around 12%, close to the level before the ruling, so the immediate damage to trade negotiations and existing deals is limited. Still, Section 122 lasts only 150 days, so the focus now shifts to more solid but slower legal paths, such as Sections 232 and 301. That creates some execution risk and possible refund claims that could take months or even years to settle in the lower courts.

Impact on Gold

The fresh uncertainty over future tariff policy has pushed investors into safe-haven assets. Gold (XAUUSD) rose more than 2% on Monday and touched a three-week high near $5,257 per ounce (oz). Because the ruling created a temporary vacuum in trade policy and triggered an immediate, aggressive response from the White House, market participants are worried about the long-term stability of global trade. Gold will likely continue to see strong demand and possibly set new records in the coming months as geopolitical and economic risks remain high, including the ongoing U.S.–Iran tensions, and the reopening of major markets such as China following the Lunar New Year holiday.

Impact on the U.S. Dollar

Surprisingly, the dollar index (DXY) weakened modestly after the ruling and is now trading at around 97.8, but remains within a short-term bullish trend. Markets are cautious because the overall trade picture is far from settled. Indeed, companies may now accelerate filing tariff lawsuits. Additionally, established trade deals now face heightened vulnerability, while preliminary framework agreements—such as those with the EU, Vietnam, and Switzerland—may remain stalled as they await greater legal clarity.

Meanwhile, the unexpected drag on Gross Domestic Product (GDP) from the recent government shutdown has complicated the outlook for the U.S. dollar. The greenback’s strength will likely depend on whether the Federal Reserve (Fed) prioritises fighting inflation or supporting a slowing economy. Overall, the U.S. dollar is likely to trade sideways in the weeks ahead in a tight 96.5-98.6 range.

Impact on Equities

Equity markets reacted with caution rather than panic. The S&P 500 dropped around 1% on Monday, but the move is in line with overall volatility—nothing extraordinary. Right now, investors are probably trying to balance the hope for lower inflation against the risk of new trade barriers. Overall, the next 150 days will be critical for assessing whether the administration’s new trade tools can withstand further legal challenges.

New Deadline

The administration’s pivot to Section 122 serves as a stopgap measure. Because Section 122 is limited to 150 days and a 15% cap, it serves as a transitional mechanism rather than a permanent trade tool.

Overall, the immediate practical impact of the Supreme Court ruling is limited, as the resulting litigation for tariff refunds is expected to take months or even years to resolve in the lower courts. Investors and policy analysts should closely monitor the 150-day expiration timeline, currently set for 24 July 2026, as well as any new legislative challenges.

Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Elev8 does not accept any liability for any resulting losses or consequences.

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