Chief Investment Strategist, The Freeport Society
It’s all in the Supreme Court’s hands now.
Nine Justices will decide, likely soon, whether or not President Donald Trump’s tariff regime is legal.
This is a really big deal.
Trillions of dollars in tax revenues are at stake.
So is Trump’s foreign policy. The tariffs have been the focal point of his entire second term.
Depending on how the ruling goes, we could see a massive impact on the stock and bond markets… as well as the dollar.
So, what’s the story?
And more importantly, how do we position our portfolios for it?
Let’s answer those questions today…
Chaos in the Courts
Back in May, the U.S. Court of International Trade unanimously ruled that the Liberation Day tariffs were illegal.
Tariffs are a tax that Congress must set, and the International Emergency Economic Powers Act that Trump used as justification doesn’t give the president carte blanche to set trade policy. The U.S. Court of Appeals agreed, ruling 7-4 that the tariffs were illegal… though allowing them to stay in place while the president appeals to the Supreme Court.
So, here we are.
How will the Supreme Court rule?
Your guess is as good as mine.
The constitution is pretty clear that the authority to regulate international trade sits with Congress, but the Court has been reluctant to really pick a fight with the president.
For what it is worth, Bloomberg Intelligence gives it a 60% chance that the Justices find the tariffs illegal.
If that happens, does the Treasury have to pay back the $142 billion in tariffs it’s collected so far this year?
What happens to tariff rates?
Do they revert to January levels?
Does the Court allow the tariffs to remain in place for a while to give Trump time to negotiate with Congress?
No one knows.
But let’s assume the most extreme case plays out: The Court rules all “reciprocal” and “fentanyl” tariffs illegal and orders the Treasury to refund the tariffs already collected to the American importers.
What happens then?
Winners and Losers
The obvious winners would be the American importers. They’d immediately be $142 billion richer. This would be a massive relief to untold numbers of small businesses as well as the big boys like Walmart (WMT) and Home Depot (HD).
It would also effectively be a $142 billion stimulus program, the equivalent of sending every American man, woman and child a $400 check.
That’s a real shot in the arm for the parts of the economy that are struggling right now (which is pretty much everything outside of the tech sector).
There are a lot of moving parts, of course, but it would be broadly positive for the stock market.
It’s the bond market that might not take it so well….
Between now and the end of the year, the Treasury has to roll over about $3.6 trillion in maturing debt… and expects to borrow something in the ballpark of a trillion more.
The Trump tariffs were never going to come close to plugging that hole. But if the Treasury has to refund the money, it blows the hole $142 billion wider… and reduces future revenues as well.
It’s no coincidence that Treasury yields have been rising.
Uncle Sam is a riskier credit than he used to be, and that’s getting priced into bonds. The 30-year bond yield came close to touching 5% just days ago.
It’s also no coincidence that gold is hitting new all-time highs. The yellow metal cracked $3,600 for the first time this week as investors look to hedge their dollar risk.
How to Trade It?
First, the no-brainers.
Hold on to your gold and keep your exposure to long-term bonds minimal for now. That’s just basic self-preservation.
But remember, with a potential flood of new liquidity likely to be injected into the economy due to tariff rebates, you also want to look for opportunities in beaten down stocks that are primed to soar.
That’s where legendary macro investor and Senior Investment Analyst at InvestorPlace, Eric Fry, steps in.
Eric has built a career finding stocks that deliver 1,000%+ gains. In fact, he’s handed his readers 41 different 10-baggers — with some soaring as high as 7,992% on Bitcoin and 2,045% on BHP Group.
Now, working with a team of exceptionally talented developers, he’s turned that lifetime of experience into a machine. He calls it “cobotics” – part man, part machine.
It’s called Apogee – a powerful new stock-picking system designed to pinpoint the exact moment when a stock enters what Eric calls the 10X Pattern…
During five years of testing across 14,000 stocks and 31 years of history, Apogee delivered:
- 308% average gains on winners
- A 72% win rate
- And multiple trades that crushed the S&P 500 by thousands of percentage points.
If Apogee had been live in years past, it would have flagged:
- Apple before its 4,331% surge
- Amazon before its 1,115% climb
- Nvidia before its 3,587% explosion
Eric says Apogee is “the biggest breakthrough of my 30-year investing career.”
He’s preparing a 10X Breakthrough broadcast to air on September 10, at 10 a.m. ET. During this event, he’ll unveil Apogee and explain exactly how it works. He’ll also share the five stocks that could be the next 10-baggers. Reserve your spot for that free event here.
To live, liberty, and the pursuit of wealth.