Tariff drama is once again dominating market headlines following the Supreme Court’s decision to strike down the strictest rates. While the news is undoubtedly bullish for many retailers, the muted market reaction may have left investors confused. Let’s dive into why the market reacted the way it did, and how the news still creates opportunities for several stocks that are no longer in trade war crosshairs.
Where the Tariff Situation Currently Stands
On Feb. 20, the Supreme Court ruled against President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without Congressional consent. In a 6-3 decision, the Court held that the President exceeded his authority under IEEPA and that all tariffs imposed under that law must be vacated immediately.
Following the ruling, Trump enacted new 10% tariffs under Section 122 and announced the current tariffs under Section 232 would remain in place. According to a Penn Wharton analysis, the new effective tariff rate is 9.1%, down from the 9.8% effective rate that was in place for most of 2025. Companies facing tariffs will certainly welcome any relief, but the incremental rate decline explains why the market reaction was more of a yawn than a celebration.
However, the new tariffs Trump installed under Section 122 come with limitations that the IEEPA ones lacked. Section 122 tariffs cannot be tailored to specific countries, nor can the rate exceed 15%. And unlike IEEPA rates, they don’t stack on top of other types of tariffs (such as Section 232). But most importantly, the tariffs are temporary; after 150 days, the President must request an extension from Congress, which would likely be a non-starter with mid-term elections just a few weeks after the tariff expiration.
Another wild card in the tariff situation is the prospect of refunds. The IEEPA tariffs collected an estimated $175 billion, and companies seeking refunds must file a suit in the Court of International Trade. Tariff refunds would be a windfall for hundreds of corporations that had built higher import costs into their 2026 projections. Refunds plus another rate reduction following the expiration of the 150-day window under Section 122 present dual tailwinds for stocks that faced the most tariff pressure.
3 Stocks That Benefit From Tariff Cancellations (and Potential Refunds)
The market’s recovery over the final eight months of 2025 may have reflected expectations that the Supreme Court would limit the administration’s tariff authority. Regardless, the tariffs materially affected the following three stocks, and any rollback of those measures—along with potential refunds—could have meaningful implications going forward.
Five Below: Immediate Relief on China Imports
Five Below Inc. (NASDAQ: FIVE) faced serious margin pressure from tariffs since most of its products are imported from China, and the firm’s business strategy prevents it from passing the cost burden onto customers.
The company courts the youngest (and most price-sensitive) customers, and every tariff rate hike directly impacted Five Below’s margins.
Therefore, revoking the harshest rates on China provides immediate relief.
Additionally, the Supreme Court’s decision provides future predictability and removes the threat of ever-expanding escalation, as we saw last spring with the Liberation Day tariffs.
Five Below reported its fiscal Q3 2026 results in December, and while the numbers were exceptional, management warned of a potential 240-basis-point decline in operating margin due to tariff costs. The company will release its fiscal Q4 results on March 18, and while the tariff relief is unlikely to factor into those numbers, projections for fiscal 2027 will be improved compared to last quarter. Analysts at JPMorgan certainly think so, which is why they boosted their price target to a Street-high $259 (representing upside of nearly 15% from current levels).
Ross Stores: Margin and Inventory Boosts on the Horizon
Ross Stores Inc. (NASDAQ: ROST) also benefits from the tariff decision, although in a more indirect way than Five Below. While more than 50% of the company’s merchandise originates from China, Ross itself does very little importing.
Instead, it purchases overstocked inventory from other U.S. brands that have already paid the duties.
Many companies in the retail sector front-loaded their inventories last year to avoid tariff exposure and may now seek to unload that inventory to resellers like Ross at an even deeper discount.
Additionally, Ross reported that tariffs still shaved 16 cents off EPS from the company’s fiscal 2025 numbers.
In Ross's March 3 earnings report, investors will keep a close eye on guidance projections now that the IEEPA tariffs have been struck down. Analysts were bullish ahead of the results as five firms raised price targets on ROST shares in February, including a Street-high $232 from JPMorgan on Feb. 23.
FedEx: Trade Volume Recovery and First Mover Advantage on Refunds
FedEx Corp (NYSE: FDX) won’t see the type of margin relief that retailers like Five Below and Ross Stores will, but it also reaps unique benefits.
The primary tariff-reduction perk for FedEx is the resumption of normal operations on its most lucrative trade route: China to the United States.
FedEx executives estimated that tariffs caused a $1 billion revenue headwind during the 2025 fiscal year, a figure that should be much easier to manage now that IEEPA tariffs are no more.
FedEx was also the first company to sue the U.S. government for a refund following the Supreme Court decision. If the suit is successful, the firm could be eligible for up to $1 billion in tariff relief and garner plenty of goodwill by returning some of that windfall to shippers. One note of concern: investors expected bullish news for FDX shares, and the stock is currently overbought according to the Relative Strength Index (RSI). A return to support at the 50-day moving average might present a more stable entry point for new positions.
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The article "3 Stocks With the Most to Gain From Tariff Relief" first appeared on MarketBeat.
