Stocks closed higher after Trump’s tariffs met with skepticism from the Supreme Court

5:56 Traders work at the New York Stock Exchange (NYSE) the morning after Democrats won in New York, New Jersey and other states, on November 5, 2025 in New York. Spencer Platt/Getty Images

The Dow Jones Industrial Average closed down 225 points, or 0.4%, while the S&P 500 jumped 0.3%. The Nasdaq technology index rose 0.6%.

Trump has raised the tariffs in recent months, in part through authority under the International Emergency Economic Powers Act (IEEPA), the statutory authority in question. before the Supreme Court.

Major stock indexes fell sharply after Trump unveiled sweeping tariffs in April, but markets rebounded to new highs in the days and weeks that followed after Trump eased policy. The Dow Jones Industrial Average is up about 11% this year, while the S&P 500 has jumped 16%.

However, the levies have coincided with rising inflation and a slowdown in hiring, creating the risk of an economic double whammy known as “stagflation.”

Trump is the first president to try to use the IEEPA to set tariffs without Congress, and the judges pushed Solicitor General John Sauer to justify the authority.

Sauer argued that tariffs are “regulatory” in nature and that any revenue generated is contingent. That’s despite Trump often bragging about the billions of dollars he says the administration has made from the fees.

Sauer faced a barrage of questions from the justices, including several conservatives who appeared skeptical of Trump’s tariff authority under the IEEPA.

President Donald Trump with Treasury Secretary Scott Bessent, right, speaks during a conversation with South Korean President Lee Jae-min at the Gyeongju National Museum in Gyeongju, South Korea, Oct. 29, 2025. Mark Schiefelbein/AP

As part of the case, the nation’s highest court will consider the legality of gatherings from dozens of countries that opened during a ceremony in the Rose Garden that Trump called “Liberation Day.” The case also involves tariffs imposed on China, Mexico and Canada, as well as a basic 10% tax imposed on almost all imports.

If the Supreme Court allows Trump’s highest tariffs to remain in place, prices will rise. some economists previously told ABC News they may accelerate, while economic uncertainty over the tariffs could put pressure on hiring.

But some economists said the Supreme Court case would have little effect on inflation or interest rates because of the sheer size and inertia of the U.S. economy and the Trump administration’s plans to impose tariffs under other legal authorities.

Trump would still retain the authority to levy industry tariffs and impose a 15% tariff for up to 150 days under the Trade Act of 1974, which allows the president to address trade imbalances with other countries.

The overall average effective tariff rate is 17.9%, the highest since 1934, the Yale Budget Lab reported last week. Prices are expected to rise gradually this year as a result of the levy, which is about $1,800 for the average household, the group said.

ABC News’ Devin Dwyer and Peter Charalambous contributed to this report.

Source: abcnews.go.com