Trump's Tariffs Ruled Illegal, Iran Strike Ready; How Will Markets React? | Matt Gertken
Summary
- The US Supreme Court ruled against President Trump's use of IEEPA for indefinite tariffs, forcing a pivot to Section 122 (temporary 150-day tariffs). This is viewed as net bullish for equities as it limits unilateral executive taxation power and implies tariffs will eventually decline.
- A significant military escalation with Iran is imminent. Approximately one-third of the US Navy is positioned near the region. Gertken assigns a high probability (80%+) to US strikes on Iranian nuclear and ballistic missile sites, viewing a diplomatic deal as unlikely (20%).
- The administration is expected to delay aggressive Section 301 tariffs against China until after the 2026 midterms to avoid economic drag, opting for "diplomacy" and a trade truce in the interim.
- Oil markets are pricing in a risk premium, but Gertken warns that if a surprise deal is reached, energy and gold would face a sharp sell-off.
Trade Ideas
"The stock market should be happy because what it means is that all future presidents, if they want to raise taxes, they have to go through Congress... That revenue since it was illegitimately raised will now have to go back to the companies that paid it." The Supreme Court ruling removes the "tail risk" of infinite unilateral tariffs. The replacement Section 122 tariffs are temporary (150 days) and likely won't be renewed by Congress. Furthermore, companies receiving rebates on illegal tariffs acts as a cash infusion/fiscal easing, supporting equity valuations. Long Broad Equities on the removal of structural tariff uncertainty. An oil shock from the Iran conflict causing a recession or inflation spike.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
"It's reported that a third of the US Navy is now positioned... towards Iran... The president has already ordered strikes on Iran... I think they are going to do [bomb Iran], by the way." The massive military buildup is not just symbolic; it is preparation for retaliation. While Iran may try to avoid hitting oil infrastructure to prevent a total US war, the risk of a supply shock or closure of the Strait of Hormuz (even partially) necessitates a geopolitical risk premium in energy prices. Long Oil as a hedge against imminent kinetic action. A surprise diplomatic breakthrough (20% chance) or Iran capitulating on nuclear inspections would cause oil to plummet.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
"You're also probably going to continue to hold gold for now... You're just sort of in a tilt toward energy and commodities." Gold serves as the primary hedge against the escalating conflict in the Middle East. However, the trade is crowded ("tremendous rally"), so it is a "hold" rather than an aggressive "buy." Maintain Long exposure but be ready to sell. If the IAEA meeting in early March results in a deal, "you're going to want to be selling quick and booking gains."
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
"We're already in a war with Iran... The US is building up... This is preparation for retaliation... for the Houthis to come back out and try to hit ships... for the Iranians to try to hit the Persian Gulf." The explicit mention of intercepting missiles, defending shipping, and striking ballistic missile sites directly benefits defense prime contractors involved in missile defense systems and naval armaments. The scale of deployment ("way overkill if you're just trying to flex") implies high consumption of munitions. Long Defense Contractors. De-escalation or a nuclear deal would reduce the immediate demand urgency.
Up Next
This The David Lin Report video, published February 21, 2026, features Matt Gertken discussing SPY, IVV, VOO, USO, GLD, RTX, LMT, GD. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Matt Gertken · Tickers: SPY, IVV, VOO, USO, GLD, RTX, LMT, GD