The S&P 500 fell 10% over 2 days after the April 2 pharmaceutical tariff announcement. It barely flinched when the Supreme Court struck down the original IEEPA tariff authority 6 weeks earlier. That gap is the number everyone should be watching.
The replacement tariffs, now set at 15% under Section 122 of the 1974 Trade Act, will hold. Not because they are good policy, and not because Congress endorses them. They will hold because the institutional machinery to dismantle them does not move fast enough, and the political incentives to keep them are stronger than the polling suggests.
The Legal Threat Is Real but Slow
Yes, 207 members of Congress have joined the legal challenge. That sounds like a lot until you remember it is less than half the body. The SCOTUS ruling in Learning Resources, Inc. v. Trump was a genuine blow, stripping the IEEPA basis entirely. But the administration replaced the authority within days. Section 122 was designed for exactly this kind of temporary balance-of-payments action, and while its 150-day limit creates a clock, the White House has already signaled it will seek congressional authorization or negotiate bilateral deals before that window closes.
Ray Vega and others who see legal fragility here are making a fair point: Section 122 was never intended for permanent trade restructuring. I grant that. But the relevant question is not whether the legal basis is elegant. It is whether any court will issue an injunction fast enough to matter before the administration converts these tariffs into something more durable. The February ruling took months to arrive. The replacement took days.
Speed of bureaucratic adaptation matters more than legal purity in trade policy. It always has.
Inflation Is a Bruise, Not a Fracture
Fed Chair Powell pegged the tariff contribution to inflation at 0.5 to 0.75 percentage points as of his March 18 press conference. That is meaningful. For a household earning $75,000 a year, the Yale Budget Lab's $2,400 annual cost estimate works out to roughly $200 a month in higher prices across food, cars, and consumer goods. That stings.
But inflation at 3% is not 2022's 9%. The economy is absorbing this. Goods imports fell only 3.5% in Q4 2025 versus the prior year, which means consumers are paying more rather than buying less. Companies are passing costs through at 76 to 100% on durables. The system is bending, not breaking.
The political math is more interesting than the economic math. Trump's approval sits at 35%, and 65% of voters say his policies are worsening the economy. Terrible numbers. But midterm elections are 7 months away, and the administration has a clear playbook: exempt popular consumer goods, keep the baseline rate on industrial inputs, and claim credit for $214.7 billion in tariff revenue. Inu Manak at CFR has already flagged this strategy. Selective exemptions buy time without requiring a formal retreat.
The tariff revenue number is the one that keeps this alive in Congress. $214.7 billion is real money. It funds priorities that members of both parties want funded. Voting to repeal tariffs means voting to find that revenue somewhere else. Nobody wants that vote 7 months before an election.
Foreign direct investment came in at $288 billion in 2025, flat against the 10-year average. The reshoring narrative has not materialized. I am not arguing it will. I am arguing it does not need to for the tariffs to persist. Policy survival does not require policy success. It requires the absence of a viable alternative that enough legislators will support.
Congress will not repeal these tariffs. It will negotiate around them. Expect bilateral deals with allies that lower rates selectively, a formal congressional authorization of a 10% baseline by late 2026, and continued legal theater that produces headlines but not injunctions. The institutional path of least resistance is accommodation, not confrontation.
The S&P told you this in February. The court ruled, the market shrugged, and the tariffs came back under a different statute within a week. That is not fragility. That is a policy with more institutional support than its approval rating suggests.
