BCA Research analysts argue a Supreme Court ruling against President Trump's tariffs could reduce the U.S. recession probability to 40% from 50%. The court is reviewing whether Trump's levies, imposed under a 1977 emergency law, are legal. Markets are betting against the White House, with Polymarket showing just a 31% chance the tariffs are upheld.

Trump has used tariffs aggressively, threatening new taxes on European NATO members over Greenland. BCA's Peter Berezin and Melanie Kermadjian see a ruling that curbs this power shifting risks. The chance of an economic overheating scenario would rise to 25% from 20%, while a 'soft landing' probability increases to 35% from 30%.

The analysts also lifted their S&P 500 year-end 2026 target to 6,375 from 6,200. Trump's tariffs have already pushed the U.S. effective rate to its highest since the 1930s. Economists note this has fueled a 'K-shaped' recovery, benefiting high earners while straining lower-income households and contributing to market uncertainty ahead of midterms.