US stock markets are preparing for a cautious opening on Friday, January 9, as traders position themselves ahead of two significant market-moving events. Pre-market futures indicate minimal movement across major benchmarks, with the Dow Jones Industrial Average futures up 6 points or 0.01%, S&P 500 remaining largely unchanged, and Nasdaq-100 futures showing modest gains of 0.10%.

Supreme Court Tariff Decision Takes Center Stage

The primary focus centers on the US Supreme Court's anticipated ruling on Trump's tariff policies implemented after he resumed presidency in January 2025. The decision will determine whether the president can utilize the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval. Trump announced tariffs ranging from 10% to 50% in April, targeting multiple trading partners including India.

Lower federal courts have already ruled that many tariffs exceeded presidential authority under existing laws, stating that the statute used does not explicitly empower broad import duties—a power traditionally reserved for Congress. During November 5 arguments, the court's conservative majority expressed serious concerns over this interpretation of federal law.

Financial Implications of Potential Ruling

Analysts anticipate significant financial consequences if the Supreme Court rules against the tariff implementation. The potential impact includes substantial reimbursement obligations and broader economic effects.

Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, expects the ruling to go against Trump, noting that such reimbursements could pressure the US dollar and inflation while impacting an economy already facing substantial debt challenges.

Technical Analysis Reveals Breakout Patterns

Despite the cautious sentiment, technical analysts identify positive chart formations across major indices. Anshul Jain, Head of Research at Lakshmishree, highlights several key developments:

Dow Jones Technical Setup:

• Confirmed breakout from 38-day cup-and-handle formation
• Strong volume expansion validating participation
• Rising 10-, 20-, and 50-day moving averages providing support
• Target zones: 50,500 near-term, 52,000 extended

Nasdaq Compression Pattern:

• 66-day triangle formation on daily chart
• Bullish cup-and-handle structure emerging
• Breakout above 25,800 could target 26,600 zone
• Rising short-term averages reinforcing trend support

S&P 500 Formation:

• Breakout from 38-day cup-and-handle near 6,925
• Strong volume expansion indicating fresh participation
• Near-term target: 7,040, extended target: 7,120

Market Outlook and Risk Factors

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, emphasizes that market reaction will depend on ruling details—whether partial or complete tariff invalidation. A complete declaration of illegality could benefit Indian markets, as India faces 50% tariffs under current policies.

The combination of the Supreme Court decision and upcoming payrolls data creates a complex environment for traders. Technical patterns suggest underlying strength, but fundamental concerns about tariff reversals and their fiscal implications maintain cautious sentiment across trading desks.

The US Supreme Court is preparing to deliver a landmark verdict on tariffs imposed under emergency powers, a decision that could trigger one of the largest tariff refund exercises in US history with over $133.50 billion potentially at stake. The ruling carries significant implications for Indian markets and exporters who have been subjected to some of the steepest US tariffs globally.

Current Tariff Impact on Indian Exports

Indian exporters currently face substantial trade barriers in the US market, with tariff rates creating significant challenges across multiple sectors.

These tariffs have increased costs for Indian exporters across sectors including engineering goods, chemicals, auto components, textiles, and pharmaceuticals, directly impacting margins and competitiveness in the US market. The duties were imposed under the International Emergency Economic Powers Act (IEEPA) of 1977, starting February 2025, covering fentanyl-related duties, reciprocal tariffs, and country-specific punitive measures.

Legal Challenge and Court Proceedings

The tariffs face significant legal challenges that have progressed through multiple court levels. Lower courts have consistently ruled against the tariff authority, with the US Court of International Trade determining that IEEPA does not grant explicit presidential authority to levy broad-based import tariffs, as taxation powers rest with Congress. The US Court of Appeals for the Federal Circuit later affirmed this position, agreeing that the IEEPA-based tariffs were unlawful and exceeded executive authority.

However, the appellate court stayed the impact of its ruling, allowing the tariffs to remain in force temporarily while the matter moved to the Supreme Court. The Supreme Court conducted oral arguments in November, with a decision expected as early as this Friday.

Refund Mechanism and Scale

The US Customs and Border Protection (CBP) has prepared for potential massive refund operations by implementing significant procedural changes.

CBP has introduced a fully electronic refund system through the ACE portal, requiring importers to register for ACH payments by February 6. After this date, CBP will discontinue paper checks, as handling refunds on such a large scale would not be feasible manually.

Market Impact Scenarios

The Supreme Court decision presents two distinct scenarios with different implications for Indian markets. If the Court strikes down the IEEPA-based tariffs, Indian markets could experience significant positive momentum. Relief from existing 50% tariffs, reduced probability of 500% secondary tariffs, and improved export visibility would likely boost market sentiment, with export-oriented sectors potentially seeing strong buying interest.

Conversely, if the Court upholds presidential tariff authority under IEEPA, Indian markets could face immediate pressure. Existing tariffs would remain in force, and the administration's leverage to implement extreme measures like 500% tariffs would strengthen, potentially creating selling pressure in export-heavy stocks.

Sector Focus and Implications

Regardless of the Supreme Court's decision, market attention is expected to concentrate on export-oriented sectors with high US market exposure.

Key Affected Sectors:

• IT services
• Pharmaceuticals
• Specialty chemicals
• Auto components
• Engineering goods
• Textiles
• Metals
• Gems and jewellery

The Sanctioning Russia Act of 2025, introduced by US Senators Lindsey Graham and Richard Blumenthal with presidential backing, proposes secondary tariffs up to 500% on countries continuing Russian oil purchases. According to trade experts, such tariffs would effectively eliminate India's exports to the US, jeopardising trade exceeding $120.00 billion annually, given that China and India are the largest buyers of Russian crude.