If you’d like to hear more, here’s another five minutes, where we’re going to run through the four things we’re thinking about in the near-to-intermediate term as tariffs move to a new phase, plus one longer-term thing we’re watching.

First, both the SCOTUS decision and the idea that the White House would implement tariffs through other mechanisms were widely anticipated by US equity investors.

• We saw this very clearly over the last few months through betting market data (where expectations that SCOTUS would uphold the tariffs had been fluctuating around 30% since oral arguments in early November) as well as our own conversations with equity investors on the year ahead outlook. It was clear to us from our conversations that the general contours of last week’s developments were being baked in.

Second, while it’s true that uncertainty is elevated in the near-term, in recent months US public companies have been emphasizing their ability to manage through the evolving tariff landscape despite persistent uncertainty.

• We’ve kept a close eye on tariff commentary in our transcript reading during the past few earnings seasons. S&P 500 companies have focused on mitigation efforts, including pricing and supply chain adjustments, and, importantly have also continued to acknowledge the dynamic tariff landscape.

• This remained unchanged in the latest reporting season – we haven’t read anything indicating companies are not in a place to keep managing through.

• That being said, we didn’t see much company commentary specifically on what would happen if IEEPA was overturned; when we expanded our search, we did find some comments from a handful of SMID companies. Those include one company’s comment on a tariff unwind being a pass-through that might not benefit the company in the end, as well as other comments on how the IEEPA tariffs were only a piece of their tariff puzzle, and the general need and desire for certainty.

Third, as the details settle, we will be keeping a close eye on company commentary to gauge potential short-term earnings impacts, potentially on the positive side.

• As our FX team has highlighted, the Yale Budget Lab estimates that before the IEEPA tariffs were struck down, consumers faced an overall average effective tariff rate of 16%. Immediately following the IEEPA ruling, the rate fell to 9.1%. After the Section 122 tariffs were imposed, they estimate that rate rose to its current level of 13.7%.

• Our FX team has also pointed out that China is expected to see some of the biggest benefit from the new rules in terms of tariff levels, a thought that was echoed by an article in the Financial Times over the weekend. This jumps out to me because early on in the tariff discussion, companies focused on impacts from China in their tariff discussions. And while some of that has likely been mitigated away, its been a big enough issue that it’s worth keeping an eye on.

Fourth, at the margin we think the US equity market could also benefit from a narrative shift in the near term as attention moves away from AI jitters back to trade policy. There’s not much to say here except that it’s good for the market in my opinion to talk about something else for a while and move on to the next thing.

And wrapping up with a longer-term thought… one of the other things we are contemplating in regards to how this new phase of tariffs may reverberate in the US equity market is it’s potential role in the midterm elections.

• We’ve been getting questions on the midterms from both non-US and US investors in our year-ahead outlook meetings and have highlighted it as a risk factor to our bullish view due to the tendency of stocks to be weak in midterm election years and the tendency of the S&P 500 to trade in line with expectations for Republican election outcomes in recent years. Polling on approval on the economy and inflation have also been very low, and expectations for Republicans to take both chambers in the midterms have also fallen in betting markets.

• On Friday, our team took a look at recent polls published on the topics of tariffs specifically. Generally, the ones we found pointed to the idea that tariffs haven’t popular among voters, but that there is a strong partisan divide on the issue and that views on tariffs have been stable.

• The overall negative tilt makes us think it will be important to keep an open mind about whether the future tariff levels will be as high as they’ve been in the past given the role that the affordability issue is likely to play in the midterms, as well as to what extent Congress can be counted on to provide legislative support to tariffs if needed. But the partisan split admittedly supports the consensus view that the tariff landscape won’t change materially in the aftermath of the SCOTUS decision.

That’s all for now. Thanks for listening. And be sure to reach out to your RBC representative with any questions.