Traders bet Supreme Court won't back Trump on tariffs, dimming rebate hopes

Prediction markets, including Kalshi and Polymarket, indicate significantly diminished expectations for tariff-funded stimulus checks, with odds falling to just 5%. This decline is largely driven by a sharp drop in the perceived likelihood of the Supreme Court upholding former President Trump's tariff plan, now around 22-23% after oral arguments signaled judicial skepticism. The market's bearish outlook underscores increasing legal uncertainty surrounding the future of tariff policies and their potential economic implications.

Analysis

Prediction markets, specifically Kalshi and Polymarket, reflect a significantly diminished probability for the implementation of tariff-funded stimulus checks and the Supreme Court upholding former President Trump's tariff plan. Odds for "tariff rebate" payments have fallen to just 5%, a notable decrease from 13.4% earlier this month, with over $451,000 wagered on this market. This bearish sentiment is primarily driven by recent developments concerning the Supreme Court's stance on tariff legality.

The probability of the Supreme Court siding with Trump on his tariff policy has sharply declined to 22% on Kalshi and 23% on Polymarket, representing drops of 23 and 15 points, respectively. This shift occurred after oral arguments on November 5th signaled skepticism from the justices regarding the use of the International Emergency Economic Powers Act. The court's pending decision leaves the future of Trump's trade agenda and associated tariffs in considerable legal limbo.

The collective sentiment from these prediction markets underscores increasing legal and political uncertainty surrounding potential fiscal stimulus and trade policy. A ruling against the former President's tariff authority would effectively eliminate the proposed mechanism for $2,000 stimulus checks and reduce national debt. This outcome would also solidify the legal challenges against similar future executive actions on trade.

Key Decisions for Investors

• Investors should adjust expectations regarding potential tariff-funded fiscal stimulus, as prediction markets indicate a significantly low 5% probability of "tariff rebate" payments.
• Re-evaluate exposure to sectors sensitive to trade policy given the increased legal uncertainty surrounding executive tariff authority, with Supreme Court odds against upholding the plan now at 22-23%.
• Closely monitor the Supreme Court's upcoming ruling, as it will establish a critical precedent for future executive actions on trade and economic policy.