The US Supreme Court ruled that US President Donald Trump’s “national security” tariffs were unlawful. President Trump responded at a White House press conference on Friday. He said his administration would impose more tariffs using other legal options, including Section 301 of the Trade Act of 1974. He also pointed to national security conventions as support for this approach.

Legal Routes For New Tariffs

Many current tariffs already use Section 301. However, most tariff revenue was collected under the International Emergency Economic Powers Act (IEEPA). The administration used the IEEPA widely after its “Liberation Day” announcement in early 2025. After the ruling that limits the use of the IEEPA for tariffs, the administration is expected to rely more on Section 301. Trump said another round of tariffs could start almost immediately. When asked by the media, Trump suggested that tariff fees collected under the now-unlawful IEEPA programme would not be refunded by the White House. Businesses and consumers who paid these import fees would need to sue the administration to try to recover the money. The Supreme Court ruling was expected to bring clarity, but it has created major uncertainty for markets instead. Trump’s immediate promise to use Section 301 for new tariffs suggests we should expect high volatility in the weeks ahead. The CBOE Volatility Index (VIX), a key measure of market fear, has already jumped to 22. That level has often signalled that traders are nervous about what comes next. In this environment, a long-volatility approach using options on broad market indices like the S&P 500 may be more sensible. Directional trades are risky when policy can change overnight. But holding options can benefit from large price swings, which now look more likely. This follows the same playbook used during the trade uncertainty that built up through 2019.

Positioning For Market Volatility

We should consider bearish positions in sectors that rely heavily on imports, such as retail, autos, and technology. These sectors could face a double hit: new tariffs and the added cost of suing the government to recover billions in unlawfully collected fees. That combination could pressure cash flow and earnings. Recent data already shows the ISM Manufacturing PMI falling to 49.1, which signals a contraction. New trade policies could make that weaker trend worse. These tariff threats could also push inflation higher. The latest CPI report showed core inflation still elevated at 3.8%. New taxes on imported goods are likely to raise prices for consumers. That could make it harder for the Federal Reserve to manage the economy and could delay any interest rate cuts. This adds another risk that may weigh on the broader market. We should also expect quick retaliation from major trading partners, which could hurt US exporters. During the trade disputes that began in 2018, retaliatory tariffs on products like soybeans and bourbon led to sharp price drops and hurt producers. That history suggests caution when holding long positions in export-focused industries that could become targets. Create your live VT Markets account and start trading now.

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