IEEPA tariffs ruling: Here are the implications for Rates and FX markets

SelfRugger

2026-02-22 14:27:30

IEEPA tariffs ruling: Here are the implications for Rates and FX markets

Investing.com

Sat, February 21, 2026 at 10:22 PM GMT+9 2 min read

In this article:

BCS

+1.51%

+0.86%

DX-PC

-0.70%

Investing.com – The U.S. Supreme Court’s decision to strike down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) could reshape rates and foreign-exchange markets, with Barclays warning that investors should watch for fiscal slippage, shifts in inflation expectations and renewed volatility in currency markets.

Barclays said the ruling, which found that IEEPA does not authorize the president to impose tariffs, prompted the administration to announce an interim 10% global tariff and launch new Section 301 investigations. While alternative measures could eventually replace lost duties, the effective tariff rate is expected to decline in the near term.

For U.S. Treasuries, Barclays expects the key impact to come from potential tariff refunds and their effect on fiscal balances. The bank estimates that refunds could reach up to $175 billion, likely financed through increased T-bill issuance, which markets should be able to absorb.

However, any loss of tariff revenue could widen deficits on the margin, potentially leading to a steeper yield curve and tighter long-end swap spreads. Barclays noted that IEEPA tariffs accounted for roughly 0.5% to 0.7% of GDP in revenues, making them a meaningful contributor to deficit containment.

At the front end of the inflation market, a lower effective tariff rate may be slightly bearish, although analysts said goods prices may not adjust quickly due to pricing inertia and menu costs.

In foreign exchange, Barclays said the ruling could act as a tailwind for risk-sensitive currencies, including high-carry emerging-market FX and certain G10 currencies with strong fundamentals, as reduced tariff risks may support global growth expectations.

The decision also underscores U.S. institutional checks and balances, which could lower the risk premium investors demand for dollar assets. Taken in isolation, Barclays views the ruling as supportive for the U.S. dollar against major peers, even as broader macro forces continue to shape currency trends.

Overall, Barclays said markets had partially anticipated the outcome, but the evolving response from policymakers, including new tariffs under alternative legal authorities, will determine whether rates and FX react more sharply in the months ahead.

IEEPA tariffs ruling: Here are the implications for Rates and FX markets

Wolfe Research outlines eight risks that could spark stock declines in 2026

Morgan Stanley CIO survey: Why AI hype isn’t boosting 2026 IT budgets

Terms and Privacy Policy

Privacy Dashboard

More Info

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.