Washington D.C. — The U.S. Supreme Court on Wednesday heard oral arguments on the legality of the Trump administration’s “reciprocal” tariffs, and both liberal and conservative justices expressed skepticism about their legal foundation.

The case — closely watched by investors and trade experts — could have wide-ranging implications for U.S. trade policy and global markets.

Following the hearing, traders on prediction market Polymarket lowered the odds of the tariffs surviving court scrutiny to 25%, down sharply from around 50% a day earlier.

Market Reaction

U.S. equities rose after the hearing, with major indexes rebounding from Tuesday’s declines, as investors interpreted the justices’ tone as potentially signaling a rollback of the tariffs.

However, analysts warned that a removal of the tariffs may not be an unqualified win for markets. If the Supreme Court requires the White House to refund billions in collected duties, it could significantly widen the federal deficit.

“There’s not much of a legal argument for refunds,” said analysts at Wolfe Research, “but if that were to happen, it would deepen fiscal stress.”

Treasury yields climbed on Wednesday, reflecting the market’s concern over possible fiscal implications — a development that could ultimately pressure equities.

Political and Policy Implications

Even if the Court overturns the tariffs, Donald Trump could use other executive authorities to reimpose them, keeping trade policy uncertainty alive for corporations and investors.

“Uncertainty and unusual have been the two marquee words of 2025,” said Mitchell Goldberg, head of ClientFirst Strategy. “If the Supreme Court rules against the administration, it’s not the end of tariff policy — just another bump in the road.”