How the Supreme Court’s ruling on tariffs could impact consumer stocks
A long-awaited Supreme Court decision on presidential tariff authority could come as soon as Friday with implications for the world’s biggest consumer-facing companies. Before the high court is the issue of whether tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act, or IEEPA for short, are legal. Friday is the earliest possible day for the justices to issue an opinion after their January decision window came and went with no action taken. During arguments back in November, liberal — and even some conservative — justices expressed skepticism about the legality of the levies. The ruling matters because IEEPA-based tariffs directly affect pricing, margin, and inventory strategies — core drivers for consumer staples companies such as Costco and Procter & Gamble , and consumer discretionary companies like Amazon and TJX Companies . All four names are part of the CNBC Investing Club’s portfolio. Under the current tariff regimen, management teams have been faced with higher costs on imports that they have tried not pass along as higher prices to consumers. Ahead of the Supreme Court decision, Morgan Stanley ran an analysis on possible outcomes. A rollback or limitation of IEEPA-based tariffs, according to the analysts, could translate into a mid-single digit uplift to EBITDA (earnings before interest, taxes, depreciation and amortization) for impacted retailers. That could be a notable margin tailwind at a time when many companies are balancing economic pressures and a cautious consumer. If presidential authority under IEEPA were struck down entirely, Morgan Stanley believes the effective tariff rate could be lowered by “mid-high-single digits for several consumer good categories.” That would support retailer margins and ease pressures that come with trying to absorb tariff costs such as hiring. Even in the event of a retail-friendly outcome, all tariffs are not expected to go away. IEEPA-based levies are large part of the tariff picture, but not all of it. Additionally, the Trump administration has been clear that tariffs remain a key policy tool, saying there are back up plans to reinstall IEEPA tariffs under different trade rules if struck down by the high court. Analysts, however, think that any non-IEEPA mechanism the White House may use to put tariffs back on would not be as severe. “Anything that minimizes anything related to tariffs, any Supreme Court strike down would get this group — especially Dollar General , Dollar Tree and Five Below — roaring,” Jim Cramer said. That’s likely because the market has been discounting persistent tariff pressure, so even partial or incremental relief could lift retail stocks. Retailers are not waiting for the Supreme Court decision or the president’s next move. They have been dealing with tariffs of some sort or another for nearly a year. In the Club portfolio, there are several consumer holdings that are well positioned to navigate — and, in some cases, benefit from — the current environment or any future tariff permutation, thanks to their scale, negotiating power, and value-oriented business models. Costco COST YTD mountain Costco YTD One way to absorb tariffs is to push back on suppliers, according to Dylan Carden, analyst at William Blair. “Costco is famous for its negotiating power with suppliers,” Carden said, adding that if Jiff brand peanut butter doesn’t want to lower its prices, Costco can say, “We’ll go with Skippy.” That leverage allows Costco to protect its members’ value even when costs rise. “That company is going to fare in any environment in any weather, which is why people love that company,” the analyst said. Procter & Gamble PG YTD mountain Procter & Gamble YTD Value remains a key theme for consumer staples, and Procter & Gamble is leaning into that demand. In P & G’s latest earnings report, management said it is focused on strengthening the company’s product propositions to deliver superior value to consumers without raising prices. The market is still focused on “value from the consumer,” Feldman said, noting that “people are trying to stretch their dollars.” That dynamic suggests that value-oriented brands will win regardless of the broader macro backdrop. P & G is also benefiting from strength overseas, with international markets supporting growth as consumers worldwide continue to prioritize essential household and personal care products. Amazon AMZN YTD mountain Amazon YTD “Amazon wins on breadth of offering and dynamic pricing because they have different vendors teeing off against each other,” Carden said. That allows Prime customers to search for a vast selection of items that fit their budgets. Amazon’s “speed to market is really still a competitive advantage relative to a lot of other retailers,” Telsey’s Feldman said. Alongside fourth-quarter results, Amazon said it delivered nearly 70% more same-day items in the U.S. in 2025 than in 2024, and nearly doubled the average monthly number of customers in rural areas receiving same-day delivery. That efficiency improves the cost structure of its fulfillment network and reduces the cost to serve customers. TJX Companies TJX YTD mountain TJX Companies YTD Another retailer with negotiating power is off-price retailer TJX Companies, which benefits from retailers and vendors seeking to clear excess inventory. That makes the owner of Marshalls, T.J. Maxx, and HomeGoods “less tariff exposed,” insulating its margins relative to traditional full-price retailers. Looking ahead Despite concerns about tariffs, investors are looking to the retail and consumer staples sectors as opportunities. Carden cited a labor market holding up with real wage growth and less home-buying activity, which together provide a larger spending cushion, even as confidence remains mixed. These companies could receive additional support in the first half of the year from tax refunds, Carden added, providing an “additional tailwind for consumer spending.” While tariffs may remain a defining feature of the trade landscape, further complicating the things retailers, sticking with best of breed firms that can navigate the uncertainty is a good bet. (Jim Cramer’s Charitable Trust is long COST, AMZN, PG, TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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