Insights 
VT 
The US Court of Appeals for the Federal Circuit ruled 7-4 that Trump’s reciprocal tariffs are illegal, as the use of the IEEPA was improper against countries such as Canada, Mexico, and China. This has created uncertainty in the markets as the week begins.
Trump plans to appeal to the US Supreme Court, with a deadline of 14 October for this action. It is worth noting that three of the nine Supreme Court justices were appointed by Trump, while six were appointed by Republican presidents.
The Supreme Court’s Critical Stance
However, their critical stance on presidential policy overreach, especially bypassing Congress, leaves the outcome uncertain. Until the Supreme Court decides, the tariffs remain in place, but post-October, they may no longer be enforceable.
These tariffs in dispute do not include those on steel and aluminum, which will continue. If the tariffs are ultimately deemed illegal, it could have vast implications on the duties collected and impact ongoing trade negotiations.
A Supreme Court decision in Trump’s favour could lead to market concerns about unchecked presidential power. The situation remains tense and fluid, with the potential for widespread economic ramifications.
This court ruling puts us in a tricky spot, creating significant uncertainty until the October 14th deadline for a Supreme Court appeal. We’re seeing this reflected in the options market, where the VIX has already ticked up 8% last week to close at 19.5. This suggests traders are starting to buy protection against a big market swing.
Market Strategies Amid Uncertainty
The market is now facing a binary event, which is ideal for volatility plays but risky for directional bets. Buying straddles or strangles on major indices like the SPY could be a way to profit from a large move in either direction. This is about betting on the size of the reaction, not the outcome itself.
We remember how this played out during the 2018-2019 trade escalations, where tariff announcements caused immediate gaps in equity futures. Back then, markets whipsawed on every headline, a pattern we should expect to see again over the next six weeks. Keeping positions light and nimble will be key.
Sectors sensitive to global trade, like industrials and major retailers, will likely see the most volatility. The industrial sector already underperformed the S&P 500 by 2% last month, according to August 2025 data, as these tariff talks heated up. Derivative traders should also watch currency pairs like the USD/CNY and USD/MXN for signs of stress.
If the Supreme Court appeal fails and the tariffs are ultimately struck down, we could see a sharp relief rally in companies hurt by them. Think about major importers, auto manufacturers, and technology firms with complex supply chains. Call options on these names could become a popular trade as we get closer to the deadline.
On the other hand, if the Supreme Court sides with the administration, it signals more trade chaos is possible. This would likely trigger a risk-off move, strengthening the US dollar as a safe haven. In that scenario, put options on multinational corporations and ETFs exposed to emerging markets would be in focus.
