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 further tariffs using other legal routes, including Section 301 of the Trade Act of 1974. He referred to national security conventions as a basis for action.
Legal Routes For New Tariffs
Many existing tariffs already use Section 301, but most tariff collections were made under the International Emergency Economic Powers Act (IEEPA). The IEEPA approach was widely used after the administration’s “Liberation Day” announcement in early 2025.
After the ruling limiting use of the IEEPA for tariffs, the administration is expected to rely more on Section 301 tools. Trump indicated another round of tariffs could take effect almost immediately.
When questioned by the media, Trump suggested tariff fees collected under the now-unlawful IEEPA programme would not be returned by the White House. Companies and consumers who paid the import fees would need to file lawsuits against the administration to seek repayment.
The Supreme Court’s ruling, which was expected to provide clarity, has instead created significant uncertainty for the market. President Trump’s immediate vow to use Section 301 for new tariffs means we should prepare for high volatility in the weeks ahead. We’ve already seen the CBOE Volatility Index (VIX), a key market fear gauge, spike to 22, a level that historically signals trader anxiety about upcoming events.
Given this unpredictable environment, a long volatility strategy using options on broad market indices like the S&P 500 makes sense. Directional bets are risky when policy can change overnight, but owning options allows us to profit from the large price swings that now seem inevitable. This is a classic playbook response to the kind of trade uncertainty we previously saw escalate throughout 2019.
Positioning For Market Volatility
We should consider bearish positions on sectors that depend heavily on imports, such as retail, autos, and technology. The double impact of facing new tariffs while also having to sue the government to reclaim billions in unlawfully collected fees will severely strain their cash flow and earnings. Recent data already shows a dip in the ISM Manufacturing PMI to 49.1, indicating a manufacturing contraction that these new policies will likely worsen.
These tariff threats are also highly inflationary, just as the latest CPI report showed core inflation remaining sticky at 3.8%. New taxes on imported goods will likely be passed on to consumers, complicating the Federal Reserve’s ability to manage the economy and potentially delaying any planned interest rate cuts. This adds another layer of risk that could put downward pressure on the entire market.
Finally, we must anticipate swift retaliatory tariffs from key trading partners, which will harm major US exporters. During the trade disputes that began in 2018, we saw how retaliatory measures on products like soybeans and bourbon caused sharp price drops and hurt agricultural producers. This historical precedent suggests we should be cautious about holding long positions in export-oriented industries that could become targets.
