On February 20, the Supreme Court ruled 6-3 against President Trump’s slate of tariffs that were enacted pursuant to the International Emergency Economic Powers Act (IEEPA). The decision cut across partisan lines, with Chief Justice Roberts and Justices Gorsuch and Barrett aligning with Justices Kagan, Sotomayor, and Jackson over their dissenting colleagues, Justices Thomas, Alito, and Kavanaugh. The outcome was immediately met with apoplectic reactions from administration supporters and barely contained glee from its critics. Republicans might have appointed a supermajority of the Court’s justices, but those justices will not simply rubber-stamp the president’s agenda.

This ruling represents something of a legal watershed. It is hard to envision a sharper divergence between the priorities of the current administration—and the broader New Right—and the mainstream conservative legal movement, which has shaped American jurisprudence for decades and produced the overwhelming majority of top-flight conservative jurists. The New Right has made a case for using executive power for the common good, a means of instantiating a wide-ranging policy agenda. Tariffs are a key component of that. But meanwhile, the dominant culture of the conservative legal movement remains deeply skeptical of executive branch authority and celebrates decisions that cripple administrative power.

Don’t hold your breath.

Why am I pessimistic? Well, the problem with the Coalition isn’t just that they all want to be captain of the Titanic after it has struck the iceberg. The real problem is their policy solutions are rubbish.

Remember, there was no leadership speculation when Peter Dutton led the Coalition to last year’s historic election hammering.

The public didn’t reject the Liberals and Nationals because of internal fighting. They rejected them because they didn’t like their policies.

Dutton spent three years telling Australians that they were in the middle of a cost-of-living crisis (which was true). But when the election came around, the public could see how truly terrible the Coalition’s solutions were.

Does anyone remember the claims that nuclear, the most expensive form of electricity, was going to lower power bills?

On housing affordability, it was just as bad. Its big policy was to allow first-home buyers to drain their super accounts to buy a home. This would have been like a first-home buyers’ grant on steroids. The result would have been much higher house prices coupled with more Australians retiring in poverty.

So, will the new leadership team do any better? The early signs aren’t good.

One of the biggest supporters of the plan to use super to juice house prices was Tim Wilson. Angus Taylor has just appointed him shadow treasurer.

This past Friday, we finally got the macro headline a lot of us have been waiting on: the Supreme Court ruling on the IEEPA tariffs. The decision came down early Friday morning, and the court deemed the IEEPA tariffs illegal—effectively ending the version of the tariff regime that began on “Liberation Day” last year.

If you remember the mood a year ago, we were stepping into a chaotic policy experiment: a massive wave of tariffs, a lot of uncertainty, and a market trying to price the downstream effects in real time. Now, one year later, the original structure of those tariffs has been ruled unlawful.

But here’s the catch:

The end of the EPA tariffs doesn’t necessarily mean the end of tariff-driven damage. In fact, based on what followed, we may be walking into something that’s economically worse than what we just got rid of.

The Market Reaction: Calm… Then Chaos

The immediate market response to the Supreme Court decision was surprisingly muted. Friday’s session was fairly “meh” at first—there was a modest rally into the close, but nothing that screamed regime shift.

Then the follow-on headline hit.

A detailed examination of data from the Reserve Bank and Australia’s National Accounts reveals that wage growth is not responsible for the recent uptick in inflation.

It concludes that the RBA’s latest interest rate hike not only fails to address the much bigger driver of inflation – surging company profits – but it blames the wrong culprit.

The end result is that young home buyers are being lumped with the burden of bringing inflation down.

The report highlights that the RBA’s own data clearly shows “non-wage sources” are responsible for rising inflation.

Furthermore, forecasts in the RBA’s February Statement of Monetary Policy suggest that the impact of wages on inflation will actually fall over the next year, while inflation keeps rising.

“Lifting interest rates to slow inflation is often referred to as a blunt instrument. In this instance, the blunt instrument is being used to smash the wrong culprit,” said Greg Jericho, Chief Economist at The Australia Institute.

“The RBA’s own data makes it crystal clear that non-wage factors like massive corporate profits are driving inflation, not the meagre wage growth of workers.

“For many Australians, wages rises have been more than wiped out by interest rate rises – and certainly wiped out by price rises.

On this episode of Dollars & Sense, Greg and Skye discuss Shadow Treasurer Tim Wilson’s call for tax cuts, why tariffs won’t be replacing income tax despite Donald Trump’s claims, Australia’s bizarre subsidies for fossil fuels, and why Greg reckons he wouldn’t take a tasty pay rise to go to the dark side.

This discussion was recorded on Thursday 26 February 2026.

What we owe the water: It’s time for a fossil fuel treaty by Kumi Naidoo, is available now for just $19.95. Use the code ‘PODVP’ at checkout to get free shipping.

You can also subscribe to the Vantage Point series to get four essays a year on some of the most pressing issues facing Australia and the world.

Host: Greg Jericho, Chief Economist, the Australia Institute // @grogsgamut

Host: Skye Predavec, Researcher, the Australia Institute // @skyelark

Show notes:

5:00: am UPDATE: Questions are closed due to there being over 100! Thank you for participating and I’ll post the answers soon!

1:00 pm UPDATE: I’m reopening the comments so I can copy them over and organize them in the Q & A, and so folks can continue conversations. But I won’t be responding to any additional questions, just to what’s already here. Thanks!

3:00 pm UPDATE: I answered some of the more personal questions directly in the comments section! Check and see if you’ve been answered already. I’m leaving the more widely asked questions (Epstein!) for the Q & A.

Never in my years running this newsletter have I received as many emails asking “What is happening?” than in the last two weeks — so it’s time for another Q & A!

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