For the past year, concerns about the U.S. and global economy have boiled down to Trump's sweeping tariffs.

• Today, that worry was wiped away as the Supreme Court ruled that the unilaterally imposed levies were illegal.

Why it matters: The bottom just fell out of the administration's economic — and in many cases, geopolitical — agenda.

• No longer does Trump have a tariff "on/off" switch that underpinned many economic threats, reignited fears about inflation and impacted the nation's fiscal outlook.
• Future tariffs will need to be imposed by lengthy, more technical trade authorities — or through Congress.

What they're saying: "Call it Liberation Day 2.0—arguably the first one with tangible upside for U.S. consumers and corporate profitability," Fitch Ratings economist Olu Sonola wrote in a client note.

• Sonola says it was a "material rollback ... more than 60% of the 2025 tariffs effectively vanish."

Driving the news: In a 6-3 ruling, the Supreme Court said that affirming Trump's use of the International Emergency Economic Powers Act (IEEPA) would "represent a transformative expansion of the President's authority over tariff policy."

• Chief Justice John Roberts said that IEEPA does not authorize the president to impose tariffs because the Constitution grants Congress — and only Congress — the power to levy taxes and duties.

By the numbers: Yale Budget Lab estimated that the overall effective tariff rate drops to 9.1% without the IEEPA tariffs, versus roughly 17% if the levies were kept intact.

• Before the ruling, Penn Wharton estimated that a rejection by the court would remove more than $175 billion in expected annual tariff collections.

Threat level: The ruling will give way to a potentially chaotic refund process for businesses.

• The Supreme Court leaves that to the Trump administration. "The Court says nothing today about whether, and if so how, the government should go about returning the billions of dollars that it has collected from importers," Justice Brett Kavanaugh wrote in his dissent.

Also unclear is how global nations will respond. The overturned tariffs underpin a slew of trade deals announced by the administration earlier this year.

• Tariffs imposed under IEEPA have played a role in advancing trade deals totaling trillions of dollars, including agreements with China, the U.K. and Japan, Kavanaugh wrote.

What to watch: The Trump administration has previously said it would lean on other trade powers to replace any tariffs struck down by the Supreme Court.

• But some of those authorities require investigations that can take weeks or months to complete. It's also not certain whether the administration will impose the whole of the levies — or hold back on some in an effort to address affordability concerns.

The bottom line: Trump's sweeping tariffs caused historic economic uncertainty. Overturning them ushers in a new era of chaos.

First, the good news about the disappointing fourth-quarter GDP number released this morning: Q1 ought to be a blockbuster.

The big picture: The underlying trend of U.S. economic growth looks quite solid, despite a weak headline number from a quarter when the federal government was shuttered for 43 days.

• American consumers keep spending, and American businesses keep investing.

By the numbers: Overall GDP rose at a 1.4% annual rate in the final three months of 2025, far below analysts' expectations.

• It turns out that analysts failed to adequately account for the impact of the shutdown (encompassing roughly half the quarter) on federal expenditures.
• Federal government spending subtracted 1.15 percentage points from overall growth, so excluding the government growth tracked about a 2.6% annual rate — right in the range of forecasts.
• That raises a strong likelihood that federal spending will create a counteracting surge in the first quarter, creating a growth tailwind to start the year.
• Real final sales to private domestic purchasers, a less-volatile measure of underlying demand in the economy, rose 2.4% in Q4, down a bit from 2.9% in Q3 but still quite solid.

Zoom in: The drivers of growth for most of 2025 remained intact. Personal consumption expenditures added 1.6 percentage points to growth, and nonresidential fixed investment — business capital spending — contributed 0.45 points.

• Consumer spending was driven heavily by services spending, especially health care, while spending on physical goods was basically flat.
• Some of the strongest gains in business spending remained in AI-adjacent areas, with growth in information processing equipment and software recorded.

What they're saying: "The disappointing end to the year largely reflected a self-inflicted drag from the longest government shutdown in U.S. history," EY-Parthenon chief economist Gregory Daco wrote in a note.

Yes, but: The more negative piece of news out this morning was in a separate report on December consumer spending, incomes and inflation.

• The Personal Consumption Expenditures Price Index, favored by the Federal Reserve, ticked up to 2.9% for the 12 months ending in December, from 2.8% in November.
• Excluding volatile food and energy, it rose even more, to 3% from 2.8%.