Kalshi and Polymarket Traders Anticipate Limitations on Trump’s Tariff Powers

In recent developments, traders on both regulated and crypto platforms are expressing waning confidence that the U.S. Supreme Court will support President Donald Trump's broad tariff powers. Following recent events, participants on these platforms are reducing their stakes.

Key Takeaways

Traders on platforms like Kalshi and Polymarket exhibit decreased confidence in the Supreme Court siding with Trump on tariff powers.
On Kalshi, the likelihood of a favorable ruling for Trump plummeted to 29%, a significant drop of 28 percentage points.
Polymarket traders similarly reduced the odds to 25%.
The combined trading volume across both platforms exceeded $1.3 million, indicating that prediction markets may reveal early insights into political and judicial sentiments.
The Supreme Court's upcoming decision could redefine presidential authority over tariff imposition under emergency powers.

Kalshi, Polymarket traders bet Supreme Court will curb Trump’s tariff powers

Traders Anticipate Limitations on Tariff Authority

Both Kalshi and Polymarket have experienced volatility since the Supreme Court agreed to consider the case in September. Recently, the market exhibited its largest single-day decline since inception.

This decline suggests that traders are increasingly predicting the Supreme Court will restrict the president's ability to impose tariffs under emergency powers, potentially reshaping presidential approaches to trade and fiscal policy. The odds alignment between Kalshi and Polymarket indicates a merging of traditional and decentralized prediction markets, where traders in both fiat and blockchain environments analyze political risks through similar liquidity and probability perspectives.

Markets bet against Trump on Kalshi. Source: Kalshi

Supreme Court Justices Question Tariff Powers

The market sell-offs followed concerns raised by several conservative justices regarding Trump's assertion that he could unilaterally impose extensive import duties using emergency powers.

During a recent session, the Supreme Court engaged in extensive discussions regarding one of the most significant cases of Trump's presidency. This case questions the president’s reliance on a 1977 emergency law to impose tariffs without Congressional approval.

An Associated Press report highlighted the apprehensions among even Trump-appointed justices regarding the separation of powers and the risks of consolidating fiscal authority within the executive branch. Chief Justice John Roberts, Justice Neil Gorsuch, and Justice Amy Coney Barrett reportedly challenged the U.S. government regarding whether the 1977 International Emergency Economic Powers Act indeed grants such broad powers.

Barrett inquired about the reasons for targeting countries like Spain and France, while Roberts pointed out that tariffs, classified as taxes, have historically been a core authority of Congress. Gorsuch cautioned that granting excessive authority to the executive branch could lead to unchecked presidential power.

Historically, Trump’s trade policies have impacted crypto markets. Previous tariffs raised inflation concerns and led traders to view Bitcoin as a safeguard against fiscal instability. Conversely, uncertainty surrounding tariffs sometimes caused risk-averse behavior, prompting investors to shift towards safer assets.

Polymarket traders assign 25% odds on Trump ruling. Source: Polymarket

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