Half the Tariffs, Twice the Questions

Today's Supreme Court decision striking down the Trump administration's sweeping tariffs -  imposed under the International Emergency Economic Powers Act (IEEPA) -  is a significant constitutional moment. In a 6-3 ruling, Chief Justice Roberts and the majority ruled that the power to tax belongs to Congress, not the Executive Branch. But before anyone jumps to change their strategies, it's worth taking a measured look at what this actually changes and what it doesn't.

For the venture ecosystem, this ruling won’t change much, but might give upstart industrial startups some cost reprieve when sourcing components from abroad. The irony in our opinion is that to reindustrialize the western nations we must still tap into the very supply chains we’re trying to run away from.

As our Partner Jon has said in meetings, “the cat's out of the bag” when it comes to concerns around sovereignty and national security, which tie directly to AI, defense, pharmaceuticals, energy, and certain aspects of advanced manufacturing. There is no undoing this sentiment. As such, the long-term theses and portfolio decisions in venture aren’t going to shift on today’s news.

For those playing the long game on American reindustrialization, today's decision does offer some breathing room - the overall average effective tariff rate is essentially being cut in half, from 9.1% to 16.9%. While this is still elevated related to historical standards, it’s a material delta. If tariff relief extends to components, assemblies, and industrial equipment it could meaningfully lower the near-term cost of standing up domestic manufacturing capacity. That's a genuine positive for founders and operators trying to build the physical infrastructure of the next economy. The irony in our opinion is that to reindustrialize the western nations we must still tap into the very supply chains we’re trying to run away from.

For countries that have already negotiated bilateral arrangements with the US under the shadow of these tariffs, a new set of questions emerges: Were those concessions worth it? Did they give too much? Or does the goodwill built in the room still carry value? Honestly, it's too early to know. The geopolitical calculus here is genuinely uncertain, and anyone who tells you otherwise is guessing.

The decision today provides real, near-term relief to importers and some breathing room for those building industrial capacity. But it is not the end of the tariff debate, not by a long shot. Given the administration’s intent to pursue tariffs through alternative statutory authorities, the month-to-month planning approach companies have had to take to accommodate the volatility is unlikely to go away. Stay thoughtful, stay flexible, and don't let one court decision substitute for a durable strategy.