Week Ahead: SCOTUS Tariffs Ruling Meets Nvidia Earnings

Two of the year's biggest catalysts seem to have arrived in a single week. On Friday, 20 February, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not authorise the President to impose tariffs. Hours later, President Trump announced a replacement 10% global tariff under Section 122 of the Trade Act of 1974, then raised it to 15% on Saturday. On Wednesday, 25 February, Nvidia reports Q4 FY2026 earnings after the US close. Monday is the first full session for global markets to price both developments.

Here’s what traders need to know:

TL;DR

• SCOTUS struck down IEEPA tariffs 6-3 on Friday. The US effective tariff rate fell from roughly 17% to about 6.7%.

• Trump imposed a 15% replacement tariff under Section 122, the maximum allowed, for 150 days.

• Nvidia consensus: roughly $65-66 billion revenue, approximately $1.46 EPS. Q1 FY2027 guidance near $71 billion is the key number.

• State of the Union on Tuesday, 9 pm ET, may include expanded tariff replacement plans.

• Q4 GDP: 1.4% vs 2.5% estimate. Core PCE: 3.0% YoY.

What Is the "Effective Tariff Rate" & Why Has It Halved?

The effective tariff rate is the total tariff revenue divided by the total import value. This captures the actual impact of trade policy across all products and partners, not just the applied rate to any single country. 

Prior to Friday, the effective tariff rate for the US was around 17% pre-substitution. The SCOTUS decision cut this back to around 6.7%. The tariff rates on Chinese imports were cut by nearly two-thirds. (Source: NBC News)

The replacement 15% Section 122 tariff will push the rate back up, though not to prior levels. Section 122 caps tariffs at 15% for a maximum of 150 days unless Congress acts. Treasury Secretary Bessent stated that using alternative authorities would produce "virtually unchanged tariff revenue in 2026." Whether additional Section 232 or 301 actions follow will determine if the relief is temporary.

How Tariffs & Nvidia earnings interact

These may not be separate stories. Nvidia sources virtually all of its chips through TSMC in Taiwan, making tariff policy a direct input-cost factor. The ruling removes IEEPA duties on those imports, but replacement levies under Section 232 could partially restore them. Management commentary on tariff assumptions within Q1 guidance will be closely parsed.

Nvidia has guided with no revenue from data centres in China since export controls tightened. If the tariff reset softens the trade posture toward Beijing, hints of resumed sales could become material. Meanwhile, hyperscalers have collectively guided over $600 billion in capex for 2026, with much of it flowing through Nvidia. If tariff uncertainty causes procurement delays, even a strong Q4 could be followed by cautious Q1 guidance.

Friday's Market Reaction & the Macro Backdrop

US equities rallied on Friday. The S&P 500 gained 0.7%, the Nasdaq 100 rose 0.9%, while the Dow Jones Industrial Average ended 0.5% higher. Nvidia traded at $189.34, a 1.72% increase from the previous day. The VIX Volatility Index fell to 20. 

The primary catalyst was the  Supreme Court ruling striking down Trump's reciprocal tariffs despite being paired with disappointing GDP data. Q4 2025 GDP growth was 1.4% annualised, much lower than the 2.5% expected. The BEA estimates that the October-November government shutdown subtracted 1.0 percentage point. The December core PCE inflation rate was 3.0%, the highest in nearly a year. Sticky inflation raises the bar for rate cuts, even with tariff relief potentially reducing price pressures over time.

Factors to Watch This Week

• Tuesday, 24 February: 15% Section 122 tariff goes into effect at 12:01 am Washington time. Trump delivers the State of the Union at 9 pm ET. Any details on tariff replacements (Section 232, 301) would likely have implications for futures overnight. Alibaba, Home Depot earnings.

• Wednesday, 25 February: Nvidia Q4 FY2026 earnings after close. Focus areas: revenue beat magnitude, gross margin guidance (mid-70s target), China commentary, Rubin architecture updates. Consensus sits at roughly $65-66 billion in revenue and approximately $1.46 EPS. Q1 FY2027 guidance near $71 billion is the real event. Salesforce and Lowe’s earnings will be announced as well

Note: Several trade law experts argue that Section 122 only applies when a genuine balance-of-payments deficit exists, which they say is not the case under a floating exchange rate system. Legal challenges are plausible and could affect how durable this tariff regime actually is.

Conclusion

Two interacting catalysts define this week. The tariff ruling sets the macro backdrop; Nvidia's guidance tests whether AI spending justifies current valuations at a moment when trade policy is being rewritten in real time. The combination creates a compounding event risk higher than either catalyst alone. Monday begins the price discovery.

*Past performance does not reflect future results. The above is for marketing and general informational purposes only, and are only projections and should not be taken as investment research, investment advice or a personal recommendation.