By now you’ve probably heard the news: On Friday, February 20, the Supreme Court struck down a significant portion of the tariffs levied by President Trump last year. Then, on Saturday, President Trump announced that he would raise a new 15% “global” tariff on all countries.

 

Many investors now have the following questions: What just happened? What does it mean for the markets, the economy, and for us? And finally, what will happen next? In this message, we will try to answer them. (A word of warning: The next few paragraphs contain legalese!)

 

Let’s start with what, exactly, has just happened. First, some background. After President Trump took office last year, he announced a sweeping slate of “reciprocal tariffs” of up to 50% on imports from certain countries, and a baseline 10% tariff on imports from just about everywhere else.1 These Liberation Day tariffs, as they are frequently called, were not well received on Wall Street, and prompted a short but severe market correction. As a result, many of these tariffs ended up being delayed or revised lower. Still, when the dust settled, our nation’s overall average tariff rate was 13% at year’s end, the highest since before World War II.2

 

People can agree or disagree on whether tariffs are good policy. But remember that a tariff is essentially a tax on imported goods and services. That means whenever a U.S. business buys goods from a foreign country with a tariff on it, they must pay that tax along with the cost of the product itself. So, while tariffs can benefit some businesses, they can create added costs for others. As a result, many companies — and some states — banded together to sue the federal government, claiming the president’s actions were illegal. Those lawsuits eventually ended up at the Supreme Court.

 

Now, here is where things get tricky. You see, when President Trump enacted these tariffs, he did so through a law called the International Emergency Economic Powers Act, or IEEPA.This law, passed back in the 1970s, authorizes the president to declare a national emergency in the face of an “unusual and extraordinary threat…to the national security, foreign policy, or economy of the United States.”3 To help manage an emergency, the law also gives the president certain powers over international commerce.

 

But the IEEPA does not specifically mention tariffs, and the law has never been used as a basis for tariffs before.

Previous presidents, including President Trump in his first term, levied tariffs through other laws…laws that put caps on how high or how long those tariffs can be in place. (More on this in a bit.) Furthermore, since a tariff is a tax, and since taxation is a power reserved for Congress, the Supreme Court found that the President exceeded his authority under the IEEPA. Here’s what the Court specifically said:

 

The President asserts the extraordinary power to unilaterally impose tariffs of unlimited

amount, duration, and scope. [But] IEEPA’s grant of authority to “regulate . . .

importation” falls short. IEEPA contains no reference to tariffs or duties. The Government

points to no statute in which Congress used the word “regulate” to authorize taxation. And

until now no President has read IEEPA to confer such power. [Therefore], we hold that

IEEPA does not authorize the President to impose tariffs.4

 

The long and short of it is that all reciprocal tariffs have been declared null and void.

 

But that’s not the end of the story.

 

The Supreme Court’s decision struck down all tariffs enacted under the IEEPA…but not all tariffs, period. As we previously mentioned, there are a number of other laws that presidents can and have used to authorize tariffs. It’s no surprise, then, that merely a day after the ruling, President Trump announced a new global tariff of 15% on all countries under the authority of an entirely different law. So, while some countries still have a lower tariff rate than they did before, others now have a higher one.

 

Which brings us to the second question: What does this all mean for the markets, the economy, and for us?

 

Last year, the markets reacted negatively to nearly every major tariff announcement — and they dropped sharply again on Monday. The White House has also suggested more new tariffs may come in the near future. So, investors will be watching closely for any signs of new duties on imports. However, it’s worth noting that in the past, after investors have had time to digest each new announcement, the markets tended to stabilize fairly quickly.

 

There are other reasons to expect the markets to have a rather muted reaction to all this. For one thing, any laws President Trump may cite come with far less flexibility than the IEEPA. Take the new 15% tariff, for example: It comes with a 150-day expiration date.5 After that, it’s up to Congress to decide whether to scrap or extend those tariffs. Other potential tariffs may take a lot of time to come online. That’s because they can only be implemented after formal investigations by the government into potential unfair trade practices by foreign countries.

 

How all this will affect the economy is a more complex topic — and what you believe sort of depends on what data you look at. According to the Congressional Budget Office (in a report released before the Supreme Court’s decision), revenue from tariffs could make the national deficit $3.0 trillion less than it would have been over the next ten years.6 And there’s certainly an argument to be made that tariffs have helped the White House negotiate new trade deals with countries like Japan, South Korea, India, and the United Kingdom, among others.

 

On the other hand, there’s also evidence that tariffs are not having a positive impact on everyone. For one thing, our countries’ overall trade deficit in physical goods actually grew over the past year.7 That means the value of what the U.S. imports is still higher than the value of what it exports. (This matters, because President Trump specifically cited “large and persistent annual U.S. goods trade deficits” as the reason for enacting tariffs in the first place.1)

 

Furthermore, according to research by the Federal Reserve, “nearly 90% of the tariffs’ economic burden fell on U.S. firms and consumers.”2 If this is true, reductions to our tariff policy could affect both economic growth and inflation in ways that could be positive for the markets.

 

Now, there’s one other issue still up in the air. An issue that could affect the deficit, the economy, the markets, and even consumers. That’s the issue of refunds.

 

In the lawsuits that ended up at the Supreme Court, the question was raised about whether, if tariffs enacted under the IEEPA were illegal, businesses that had to pay them were therefore owed refunds. Both the Court and President Trump have mentioned refunds as a possibility, but the Court’s ruling did not address the question. Those refunds amount to approximately $175 billion…which would be a massive injection of money into the economy, but also a major blow to the national deficit.9 In all likelihood, the issue will have to be decided by the Courts at a later date. That date will be eagerly anticipated by investors, but we simply don’t know when or what the outcome will be.

 

Which brings us to the final question: What do we know about what will happen next?

 

We think it’s safe to say we should prepare for more tariff-related volatility over the coming weeks and months. That said, we do not believe we need to make any major changes to our long-term strategy. As we learned last spring, tariff trouble can be painful, but it’s typically temporary. In the meantime, we will continue monitoring the situation to determine if there are any short-term opportunities to seize or risks to safeguard against. But over the long-term, a financial plan remains the most effective tools in both good times and bad.

 

We hope you found this information helpful at breaking down some of the recent headlines you’ve likely seen. As always, please let us know if you have any questions or concerns. Our team is here to help!

 

Sincerely,

 

The Omell Financial Group

 

1 “Executive Order 14257,” Federal Register, https://public-inspection.federalregister.gov/2025-06063.pdf

 

2 “Who is Paying for the 2025 U.S. Tariffs?” Federal Reserve Bank of NY, libertystreeteconomics.newyorkfed.org/2026/02/who-is-paying-for-the-2025-u-s-tariffs/

 

3 “International Emergency Economic Powers Act,” www.govinfo.gov/content/pkg/STATUTE-91/pdf/STATUTE-91-Pg1625.pdf

 

4 “Learning Resources, Inc. v. Trump,” U.S. Supreme Court, www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf

 

5 “Trump says US global tariff rate will rise from 10% to 15%,” Reuters, www.reuters.com/world/us/trump-says-he-will-raise-global-tariff-rate-10-15-2026-02-21/

 

6 “The Budget and Economic Outlook: 2026 to 2036,” Congressional Budget Office, www.cbo.gov/publication/62105

 

7 “U.S. International Trade in Goods and Services,” BEA, www.bea.gov/news/2026/us-international-trade-goods-and-services-december-and-annual-2025

 

8 “Supreme Court ruling makes over $175 billion subject to refunds,” Reuters, www.reuters.com/world/us-tariff-revenue-risk-supreme-court-ruling-tops-175-billionpenn-wharton-2026-02-20/

 

Sourced from Bill Good Letters Library

 

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.

 

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.

 

If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.

 

The Omell Financial Group is an Investment Advisor with CIBC Wood Gundy in Edmonton. The views of The Omell Financial Group do not necessarily reflect those of CIBC World Markets Inc.