Prediction market traders are signaling growing skepticism that the U.S. Supreme Court will uphold President Donald Trump’s tariffs, after justices expressed doubts about the administration’s sweeping trade powers during oral arguments on Wednesday (Nov. 5).
Odds Drop Sharply on Kalshi and Polymarket
On Kalshi, contracts tied to the outcome of the case fell to about 30%, down from nearly 50% before the hearing. A similar contract on Polymarket dropped to around 30% from more than 40% earlier in the week.
The moves reflect traders’ belief that the justices’ tone suggested headwinds for Trump’s trade agenda. Prediction markets, which allow investors to bet on real-world events, often react quickly to perceived signals during high-profile hearings.
Justices Question Broad Authority
During arguments, several conservative justices joined their liberal colleagues in questioning the administration’s reliance on the International Emergency Economic Powers Act (IEEPA) to impose tariffs.
Solicitor General D. John Sauer faced sharp questions about whether the tariffs infringed on Congress’s constitutional authority to levy taxes. Critics argue that the administration’s use of IEEPA to justify reciprocal tariffs on imports from U.S. trading partners—and fentanyl-related tariffs on goods from Canada, China, and Mexico—overstepped legal boundaries.
Lower federal courts have already ruled that Trump lacked the authority to impose the measures, setting the stage for the Supreme Court showdown.
Market Reaction and Investor Sentiment
The tariff case has become a flashpoint for investors tracking trade policy risks. While the Supreme Court did not issue a ruling Wednesday, the justices’ skepticism was enough to shift sentiment in prediction markets.
The broader market impact remains muted for now, but traders are watching closely. A ruling against the administration could unwind billions in tariffs and reshape U.S. trade relations. Conversely, an unexpected win for Trump could reinforce executive authority over trade policy, with ripple effects across sectors from manufacturing to retail.
Analysts Weigh In
Chris Weston, Head of Research at Pepperstone Group, noted that prediction markets often act as "early warning systems" for investor sentiment. "When traders slash odds this quickly, it’s usually a sign they’re reading the tone of the court as unfavorable," he said.
Others caution against overinterpreting oral arguments. Supreme Court decisions can diverge from the tenor of questioning, and the timing of the ruling remains uncertain.
The Bottom Line
For now, prediction markets are betting against Trump’s tariffs surviving Supreme Court scrutiny. Contracts on Kalshi and Polymarket both dropped to about 30%, reflecting traders’ belief that the justices may strike down the policy.
Whether that skepticism proves correct will depend on the Court’s final ruling, which could carry significant implications for U.S. trade policy and executive power. Until then, investors are left parsing every signal for clues.