Last April, President Donald Trump proclaimed Apr. 2 as Liberation Day and unveiled sweeping tariffs via an executive order. These included a 10% baseline duty on imports from nearly all countries effective Apr. 5, with higher reciprocal rates on dozens of trading partners starting Apr. 9. While he paused some of the higher rates before they kicked in, the damage was done: the S&P 500 plunged nearly 5% in a single day and lost trillions in market value over the following sessions — the worst stretch since the 2020 pandemic crash.
Although stocks later rebounded sharply, uncertainty lingers over the tariffs’ legal foundation under the International Emergency Economic Powers Act. The Supreme Court, which heard arguments in November, could issue its ruling on their constitutionality as soon as tomorrow. If they are struck down, the duties would end and U.S. producers would be exposed to foreign competition. Domestic manufacturers like Caterpillar (NYSE:CAT) and General Motors (NYSE:GM) stand to suffer the most from lost protection if the tariffs are ruled unconstitutional.
Caterpillar (CAT)
Caterpillar shares rose 58% over the past year, fueled by tariffs that curb cheap Chinese imports and boost domestic demand. The company, a top producer of construction and mining equipment, gained from expanded Section 232 tariffs on steel and aluminum, which doubled to 50% by June and extended to machinery components. This limited competition from Chinese firms like Sany allowed Caterpillar to hold market share in earthmoving gear.
CEO Joe Creed noted on Caterpillar’s second-quarter earnings call that tariffs help counter unfair trade practices, supporting higher pricing as demand remained robust. Third-quarter results showed sales up 10% to $17.6 billion, with a record $39.8 billion backlog driven by energy and transportation segments. Adjusted operating margin hit 17.5% despite some tariff-related input costs, as volume growth from infrastructure projects offset pressures.
Baird analyst Mig Dobre noted last June that Caterpillar’s rally during AI-driven data center expansion was a result of its “products are used for both primary and backup power,” positioning it as a beneficiary of protectionist policies.
If the Supreme Court strikes down the tariffs tomorrow, Caterpillar would face renewed floods of low-cost Chinese equipment, eroding pricing power and market position. This could reverse backlog gains and compress margins, as foreign rivals undercut without duties. With no barriers, global overcapacity might return, pressuring shipments and earnings in key sectors like construction.
General Motors (GM)
General Motors stock climbed almost 53% over the past year, propelled by tariffs that safeguard its U.S.-made trucks from foreign rivals. The automaker benefited from a 25% duty on imported medium- and heavy-duty trucks starting Nov. 1, shielding models like the Chevrolet Silverado from Mexican and Canadian competition.
CEO Mary Barra praised the measures in October, noting they support domestic production and offset parts costs via new credits. Third-quarter earnings revealed adjusted profit at the midpoint of $12.5 billion guidance, with U.S. sales growth across trucks and SUVs even as it took a hit from tariffs. Full-year deliveries rose 6%, led by strong truck demand, pushing shares to all-time highs. Barra emphasized on the earnings call that tariffs encourage U.S. investments, like GM’s $4 billion shift of production from Mexico, boosting competitiveness.
Analysts at Reuters noted the policy’s role in raising wages and protecting against unfair imports, aiding GM’s market dominance. If the court rules against Trump tomorrow, eliminating the tariffs would open doors to cheaper foreign trucks, slashing GM’s pricing edge and volumes. This could wipe out gains from onshoring, exposing plants to competition and hitting profits, as unmitigated imports flood the market without protective duties.
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