Deep Dive: How Tariffs Affect Stock Markets — Trade Policy, Supply Chains, and Your Portfolio
On February 20, 2026, the U.S. Supreme Court struck down President Trump's sweeping "reciprocal" tariffs in a landmark 6-3 decision, ruling that the International Emergency Economic Powers Act does not authorize the president to impose tariffs. Within hours, Trump announced a new global 10% tariff — a reminder that trade policy remains one of the most powerful and unpredictable forces shaping stock markets today. Tariffs are among the most misunderstood tools in economic policy. They simultaneously affect corporate earnings, consumer prices, currency values, supply chains, and investor sentiment. The 2025-2026 tariff saga — from Liberation Day to the Supreme Court — compressed decades of trade policy lessons into a single volatile year. The U.S. trade deficit swung from -$136 billion in March 2025 to -$28.7 billion in October as importers scrambled to adjust, while the Federal Reserve cut rates from 4.33% to 3.64% partly in response to tariff-driven economic uncertainty. This guide explains what tariffs are, how they ripple through the economy to affect specific sectors and stocks, and what investors should watch when trade policy shifts. Whether you're evaluating Nike's supply chain exposure, Walmart's import costs, or Boeing's retaliatory risk, understanding tariff mechanics is essential for navigating today's markets.