The U.S. Supreme Court's ruling that struck down tariffs enacted under the International Emergency Economic Powers Act (IEEPA) may provide some short-term support for apparel and footwear shares, but the overall benefit appears likely to be restrained, Evercore ISI concluded.
Evercore's policy team told clients that while the decision initially buoyed sentiment among softlines stocks, the federal government is expected to move quickly to reestablish most of the levies under different statutory authorities. The team expects roughly 80%–90% of the current tariff levels to be replicated through alternative legal mechanisms, a prospect that limits how much the sector can gain from the court's ruling.
Analysts noted that many overseas manufacturers had already absorbed portions of tariff costs in order to avoid pushing higher prices onto U.S. consumers. That dynamic could change if factories seek price adjustments once the tariff landscape shifts, potentially offsetting any direct cost relief for brands and retailers. For that reason, Evercore said the net positive for the majority of softlines companies is likely to be small.
The ruling does not alter the administration's approach to the de minimis exemption, a provision that has been important for certain athleisure labels. Evercore pointed out that Lululemon Athletica Inc (NASDAQ:LULU) and peers that relied heavily on the exemption are unlikely to see significant benefit from the decision, while Tapestry had less exposure to that exemption.
Within footwear, Evercore identified ONON as a potential exception to the broader pattern. Based on prior conversations with the company's management, Evercore said ONON did not depend extensively on suppliers to shoulder tariff costs. That stance could reduce the likelihood of supplier demands for concessions if tariffs are adjusted, and could allow the company to retain more of any immediate margin improvement.
Evercore also cautioned that refunds for tariffs already paid remain an open question. The firm warned these claims could take years to be adjudicated in lower courts, leaving recovery uncertain and the sector's near-term outlook contingent on how quickly replacement tariffs are implemented.
Overall, Evercore urged investors to concentrate on company-specific positioning rather than expecting a broad-based tariff windfall for footwear and softlines names, given the fluid nature of policy developments and the likelihood that most tariffs will be reinstated under other authorities.