GM. This is Milk Road Macro, the newsletter that hits harder than a Supreme Court gavel on a trading desk at 10 AM ET.
Here’s what we’ve got for you today:
- ✍️ Everything you need to know about the Supreme Court and Trump tariffs.
- 🎙️ The Milk Road Macro Show: Jim Bianco Explains Why 2026 Marks the End of the Old Economic Playbook.
- 🍪 Samsung’s quarterly profit more than tripled to a record high.
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Prices as of 10 AM ET.
EVERYTHING YOU NEED TO KNOW ABOUT THE SUPREME COURT AND TRUMP TARIFFS
President Donald Trump shocked the world last year by imposing sweeping tariffs across the globe.
The moves caused huge volatility in asset markets.
Many people have moved on from tariffs now - it’s old news.
But wait a minute…
The Supreme Court is currently deliberating a case that could see a large chunk of the Trump tariffs struck down.
And a ruling could come this Friday (January 9).
This could be a big moment for asset markets.
So, what’s going on?
What’s happening this Friday?
And what does it all mean for markets?
Let’s take a look…
So, what tariffs are involved?
The tariffs involved in the court case are those that were imposed under IEEPA (i.e. the President invoked a declared “national emergency” and then applied tariffs/duties under that statute).
These include so-called “reciprocal tariffs”, plus other country-specific emergency tariffs (e.g., targeting imports from China, Canada, Mexico, India, Brazil for various non-traditional trade reasons).
The IEEPA tariffs affected by this court ruling amount to roughly 50% of total tariff revenue generated so far since Trump took office.
So it’s a sizable chunk of overall tariffs.
The remaining roughly 50% of the tariffs are not part of this legal challenge because they were imposed under different statutory bases.
The Supreme Court is set to decide whether imposing these tariffs under IEEPA was “lawful” or not.
How likely is it that tariffs will be struck down?
Experts believe there is a reasonably high probability of the Supreme Court ruling against the IEEPA tariffs.
Certainly higher than a 50% chance.
According to speculators on Polymarket, there is currently a 25% chance of the Supreme Court ruling in favor of the IEEPA tariffs (75% chance of the tariffs being struck down).
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EVERYTHING YOU NEED TO KNOW ABOUT THE SUPREME COURT AND TRUMP TARIFFS (P2)
So what’s happening on Friday?
The Supreme Court has scheduled Friday January 9 as an “opinion day”.
This means Friday is the first chance for a ruling on Trump’s tariffs.
The court never reveals in advance which decisions are ready for release, only that rulings in argued cases are possible when the justices take the bench at 10 AM ET.
In November, the Supreme Court granted an “expedited schedule” for the tariff case - or in other words, the court agreed to speed up the process.
So, there’s a very real possibility a ruling will be made this week.
Not so fast…
Even if the Supreme Court does rule against the IEEPA tariffs - that may not be the end of the road.
In a recent interview, Treasury Secretary Scott Bessent predicted that the administration will still be able to implement its tariff agenda even if they lose in the Supreme Court.
Bessent argued the Trump team could simply invoke a different statute and reimpose tariffs.
“We can recreate the exact tariff structure with [sections] 301, with 232, with 122”, he said.
How would markets react if tariffs are struck down?
JP Morgan's Delta One Desk laid out a detailed analysis on the likelihood of different scenarios and how markets might react.
They think it’s extremely unlikely that tariffs would be struck down and not replaced.
Here are their predictions:
- TARIFFS STRUCK DOWN AND IMMEDIATELY REPLACED - [66%] this is the base case per comments from both Trump and Bessent. Future realized effective tariff rates should remain similar to what was paid in 2025. Look for the S&P 500 to rise on the announcement, 0.75%-1% on the day, and then for investors to fade the move as the administration replaces emergency tariffs.
- TARIFFS UPHELD - [24%] this status quo outcome may see bigger moves in the Treasury market than with equities. Look for the S&P 500 to decline 30bp-50bp on the day.
- TARIFFS STRUCK DOWN AND REPLACED AFTER MIDTERMS - [9%] this is a bullish outcome as this assists the Fed’s tariff-induced inflation headwind, gives small businesses temporary relief but increases uncertainty unless there is a specific announcement on timing. Assuming the administration is transparent on timing, look for the S&P 500 to rise 1.25%-1.5% on the day, with the Russell 2000 (small caps) significantly outperforming.
- TARIFFS STRUCK DOWN AND NO REPLACEMENT - [1%] this would be the most bullish outcome for stocks but may see big volatility in the Treasury market which may limit the equity move. S&P 500 rises 1.5%-2% on the day, again with the Russell 2000 outperforming.
Wrapping up
A court ruling on Friday is a very real possibility - and the odds are that the IEEPA tariffs will be struck down.
However, it’s also likely that the tariffs will just be replaced under a different statute - although whether this happens immediately is less clear.
Friday could be a big day for markets - with a labor market report also due to be released revealing new data for jobs growth and unemployment.
A lot of intra-day repricing could take place on Friday if we see a court ruling alongside the labor market report.
Brace for volatility!
That’s it for this edition - catch you in the next one.
Before you go…
We’re curious how you think this plays out 👇
How do you think the Supreme Court tariff case plays out?
- Tariffs struck down, reimposed fast
- Tariffs upheld
- Tariffs struck down, reimposed later
- Tariffs struck down, no replacement
STOP PLAYING BY OLD RULES 🔥
In today’s episode, we sat down with Jim Bianco to talk about why 2026 marks the end of the old economic playbook.
Here’s what you’ll hear:
- Why 2026 is a regime shift with stickier inflation, higher rates, and tighter returns.
- How immigration, not tariffs, is the real macro shock changing what “good” jobs numbers look like.
- Why AI can be a “good bubble” where investors get wrecked but the infrastructure powers the next wave.
- The ugly affordability math and why housing is the problem with no painless fix.
Tune in and see for yourself. 👇
YouTube | Spotify | Apple Podcasts
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BITE-SIZED COOKIES FOR THE ROAD 🍪
Samsung’s quarterly profit more than tripled to a record high as global demand for AI servers sharply lifted memory chip prices. There’s a severe shortage in memory, and Samsung has diverted production away from everyday tech towards high-end AI chips.
In December, the U.S. services sector expanded at the fastest pace in more than a year, according to the ISM. Services activity (which accounts for 73% of the American economy) rose sharply, fueled by solid demand growth and a pick-up in hiring, the report reveals.
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