This report finds that the US court's tariff ruling is not a positive development for global stock markets, but rather leans towards being bearish overall.

This article was first published on February 24, 2026, on the AceCamp official website, offering fresh perspectives and faster insights!

This report analyzes the market impact following the US Supreme Court's overturning of IEEPA tariffs, concluding that the ruling is more bearish than bullish. The core logic is that worsening fiscal deficits will push up US Treasury yields, systematically suppressing global equity valuations. US stocks will be the most affected, while China and emerging markets will experience relatively limited net impacts due to liquidity rebalancing offsets.

On February 20, the US Supreme Court ruled 6-3 that IEEPA does not authorize the president to impose tariffs, overturning the 10% global baseline tariff, reciprocal country-specific tariffs, and fentanyl-specific rates for China (20%), Mexico (25%), and Canada (35%). Based on publicly available information, my rough calculation shows that the effective US tariff rate plummeted from about 17% to approximately 8%. Trump immediately invoked Section 122 of the Trade Act of 1974 to impose a 10% substitute tariff, which he then raised to the statutory maximum of 15% allowed under the provision, with a validity period of 150 days.

Hong Kong stocks$HKEX (00388.HK)$ The first trading day after the New Year delivered a strong 2.5% rebound; gold rose 2% on the same day to $5,206 per ounce, nearing its historical high of $5,595 on January 29; the US Dollar Index fell below 97.75, hitting a new intraday low. On the surface, this looked like a textbook risk-on scenario, but the simultaneous abnormal movements in all three asset classes were sending a contradictory signal: the stock market was celebrating 'tariff relief,' while gold was pricing in 'increased uncertainty.' These two narratives cannot both be true – at least one of them must be wrong.

Second, the tariff toolbox hasn't been confiscated; it's just had its lock changed.

The biggest market misinterpretation is equating 'IEEPA tariffs being overturned' with 'tariff cuts.'

While the 15% rate under Section 122 is lower than most country-specific rates under IEEPA, it has two limitations: first, the 150-day countdown means that an alternative must be found by mid-July, otherwise a 'tariff cliff' will occur; second, Trump has explicitly stated that he will aggressively initiate Section 301 investigations during this window—this tool has no rate cap, no time limit, and has withstood all legal challenges.

For exporting companies, a temporary tariff with a 150-day validity period—followed by a series of Section 301 investigations—is harder to navigate than a long-term, predictable tariff. Companies making Capex decisions and signing supply contracts need policy visibility, yet we are entering the phase with the poorest visibility. Tariff policy has shifted from a centralized model of 'presidential orders' to a fragmented model of 'multiple legal tools,' and the wait-and-see sentiment in the supply chain will not substantially ease.

There’s also a wildcard: Section 338—a provision in the 1930 Tariff Act that has never been formally invoked, allowing for tariffs of up to 50% on countries 'discriminating against American commerce.' Analysis by the Atlantic Council points out that this provision has never been legally tested in court, and if activated, it will almost certainly face litigation. If the US government ultimately resorts to this provision, the market will face prolonged and painful tariff uncertainty.

Third, the real gray rhino: US Treasury yields.

If the switching of tariff tools is a tactical issue, then the sharp deterioration of the fiscal deficit is the core strategic threat—and a risk that the market currently severely underestimates.

The CBO previously estimated that IEEPA tariffs would contribute $3.3 trillion in revenue over the next decade, reducing the deficit by about 1 percentage point of GDP annually, largely offsetting the spending expansion brought by the 2025 Big and Beautiful Act. Now, most of that money has evaporated. According to Capital Economics, if the IEEPA tariffs are permanently removed and replacement tariffs maintain only an effective rate of about 8%, additional annual revenue would be just around $130 billion, pushing the deficit to nearly 7% of GDP. Adding potential IEEPA tariff refunds of about $100 billion (law firms have noted that refund-related legal battles could drag on for years), the short-term deficit could approach 8% of GDP.

This fiscal gap can only be filled by issuing more Treasury bonds.The logic chain is clear: loss of tariff revenue → widening deficits → surge in Treasury supply → upward pressure on yields → systematic increase in discount rates for global risk assets. On February 23, the ten-year Treasury yield closed at 4.03%, which seemed moderate; but on the day of the ruling, the yield quickly rebounded from an initial decline (due to easing tariff inflation expectations) to 4.09%—the market already smelled fiscal deterioration. If yields trend above the 4.25%-4.50% range due to increased Treasury supply, global equity markets will face a systemic downward shift in valuation benchmarks.

This is a game of "giving with the left hand and taking with the right." The profit margin released by the tariff reduction is likely to be offset by rising financing costs and contracting valuation multiples. And it may not stop there.

Fourth, the transmission path of negative impacts: US stocks bear the brunt, while emerging markets follow a different logic.

It is necessary to clarify a key issue here: the negative impact of the ruling on different markets is highly asymmetric.

US stocks are the most direct and significant victims. The logic is simple: fiscal deterioration, Treasury supply shocks, and rising yields – these three pressures all concentrate on dollar assets. A sell-off occurred in US stocks immediately after the ruling. The deeper issue is this: if the 10-year yield trend upward due to worsening fiscal conditions, high valuations in the US tech sector will be the first to suffer from valuation compression. Meanwhile, doubts about the sustainability of US fiscal policy → erosion of the dollar's credit premium → structural weakening of the DXY index – this chain reaction is transitioning from "hypothesis" to "reality."

For emerging markets, including China, the situation must be analyzed dialectically. The negative effects brought by the ruling – increased policy uncertainty and rising discount rates for global risk assets – will certainly also affect emerging markets (EM). No one can be completely immune. But the key difference is that EMs are currently on the benefiting end of a global liquidity reallocation. Over the past decade, global funds have excessively allocated to dollar assets to an extreme level. Now, the combination of deteriorating US fiscal conditions, a weaker dollar, and pressured valuations in US stocks is driving a structural rebalancing of capital flows – moving from overly concentrated dollar assets toward a more balanced global allocation. This is not a short-term trade but rather a medium-term trend that could last for years.

Especially for China’s stock market, in terms of capital flows, foreign capital inflows into Chinese tech assets have been very significant since early 2026. The wave of large model releases at the end of the year has further solidified the positioning of China’s tech sector as an "alternative to US stocks." This configuration-driven capital migration will not reverse just because the US Treasury yield rises by another 20 basis points – it reflects global investors systematically reducing their crowded long positions in dollar assets.

So the conclusion is:The US Supreme Court’s tariff ruling is overall negative for global stock markets, but the distribution of the negative impacts is highly uneven.US stocks are taking the biggest hit because worsening fiscal conditions and a weakening dollar are both 'domestic issues.' Although China and emerging markets will also be affected by a global increase in discount rates, this negative impact will be significantly offset by the positive effects of capital rebalancing. For China's stock market, the net impact of the ruling is limited — and may even be marginally positive for certain sectors (export chains, tech platforms).

5. The 'loosening foundation' of trade agreements

There is another underestimated spillover effect of the ruling: all trade agreements reached over the past year using IEEPA tariffs as leverage now face the risk of 'loss of consideration basis.' According to Holland & Knight, South Korea has pledged approximately $3.5 trillion in targeted investments in the US, and the EU has committed $5.5 trillion covering military and defense areas — all in exchange for reduced IEEPA tariffs.

For Southeast Asian and South Asian economies still under negotiation, the motivation to make further concessions is significantly reduced given that the White House's tariff enforcement power has been weakened by judicial rulings. This means it will take longer for the US to establish a stable new trade framework, and the uncertainty during the 'transition period' itself is the biggest enemy of global supply chains.

6. Multi-dimensional asset perspective

Gold: Safe-haven assets challenging the optimistic narrative of the stock market

On February 23, spot gold surged 2% to $5,206 per ounce, just a step away from the historical high of $5,595 set on January 29. COMEX April gold futures closed up 2.8% at $5,226. Silver also strengthened in tandem, with spot prices nearing $88 per ounce. $SPDR Gold ETF (GLD.US)$

If the market were truly pricing in 'tariff removal = trade benefits = rising risk appetite,' gold should not rise — it should fall. However, the reality is that both gold and stocks are rising, indicating that funds are placing bets on two things simultaneously: one is short-term trading of a beta rebound from falling tariffs, and the other is hedging against medium-term policy uncertainty and fiscal deterioration risks.When safe-haven assets and risk assets move in the same direction, it usually indicates that the market's repricing is not yet complete — ultimately, one side must admit defeat.

Hong Kong stocks: The rebound is supported by fundamentals, but sector differentiation is necessary.

The Hang Seng Tech Index rose 3.3% on February 23, with Meituan up 5.3%, SMIC up 5%, and JD.com up 3.6%. Morgan Stanley estimates show that the average tariff on China has dropped from about 32% to around 24%, an 8-percentage-point reduction representing a substantial profit recovery for the export chain. The non-ferrous metals sector also performed strongly - Ganfeng Lithium surged 8.48%, while Zijin Mining International rose 6.82%. $MEITUAN-W (03690.HK)$$SMIC (00981.HK)$$JD.com (JD.US)$$ZIJIN GOLD INTL (02259.HK)$$GANFENGLITHIUM (01772.HK)$

As previously mentioned, the net impact of the ruling on Hong Kong stocks is limited. The structural trend of global capital rebalancing from dollar assets to emerging markets remains intact, and the marginal benefits of tariff reductions for the export chain and tech platforms are real. However, it should be noted that the 15% alternative tariff under Section 122 is actually higher than the previous benchmark rate of 10% under IEEPA - this could even represent a marginal tax increase for non-Chinese exporters. Against the backdrop of indices already being driven higher by AI narratives, stock selection becomes more important than directional bets.

A-share Market: 'Catch-up' after the Spring Festival holiday - digesting multiple signals

The A-share market officially resumed trading today (February 24), having missed out entirely on the release of the ruling, the introduction of alternative tariffs, and the first round of pricing in global markets. However, the core issue facing the A-share market is not the tariff ruling itself - but whether it can continue to absorb the incremental inflows from the global capital rebalancing. As long as the macro narrative of global liquidity de-dollarization and allocation rebalancing remains intact, the A-share market, as the world’s second-largest equity market, retains a bottom-supported configuration value. Short-term catch-up fluctuations do not alter this medium-term logic.

Semiconductors: The 232 Investigation is a Sword of Damocles

The cancellation of IEEPA tariffs is beneficial for chip imports, but at the same time, Section 232 investigations are expanding into the semiconductor sector. If the U.S. government imposes an additional 25% 232 tariff on semiconductors citing national security reasons, the actual tax burden would increase rather than decrease. For the entire semiconductor industry chain, the switch in legal tools does not change the long-term direction of U.S.-China technological decoupling, only altering the pace and path of decoupling.

Seven: Keep an Eye on These Key Nodes

February 24 (Eastern Time tonight): U.S. State of the Union Address. Trump is expected to outline the post-ruling trade policy roadmap during a nationwide broadcast. This will be the first formal window for the market to receive policy signals. Given the audience reach and political weight of the State of the Union address, if Trump sends a tough signal in his speech - such as announcing a specific timeline or industry scope for a new round of 301 investigations - the Asia-Pacific market may face immediate sentiment shocks tomorrow.

March 31 - April 2: Trump's visit to China. China's negotiating leverage has significantly increased. Whether both sides can reach a framework agreement on tariff arrangements will directly determine the direction of the Asia-Pacific market.

Around mid-July: The 150-day validity period of Section 122 expires. At that time, if the Section 301 investigation has not produced an alternative solution, the US faces a 'tariff cliff'—either to extend it (legally questionable), invoke Section 338, or seek congressional legislation.

Whether the yield on the 10-year US Treasury bond breaks through 4.25%-4.50%. A convergence point of technical and fundamental factors; once there is a trend-breaking move, global equity markets face a systematic increase in discount rates.

Ultimately, what the US Supreme Court dismantled was the legal pillar of the tariff system, not the political will to impose tariffs. We are in a vacuum period where the old framework is dead and the new one has yet to be born. The gold market has already started pricing in this uncertainty, while the stock market remains immersed in the single narrative of 'tariff cancellation.' This divergence will eventually converge—historically, it is usually the stock market apologizing to gold, not the other way around. Volatility has far from fully reflected these tail risks—and that is the most concerning aspect at present.

The above content does not constitute any investment advice. Please bear the risks on your own.

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