Stakes couldn’t be higher in blockbuster Supreme Court tariff case
- If Supreme Court rules in favour of IEEPA tariffs, presidential power could expand to include taxes on foreign services and capital flows to and from the US
- A ruling against Trump would force refunds but US importers may be required to sue the Trump administration to get their money — and face retaliation
- Trump is moving to replace and supplement IEEPA tariffs even before the case is decided, with a special focus on Section 232 natural security tariffs
Trade policy experts provide a detailed look at the enormous consequences of the looming Supreme Court decision on Trump’s emergency tariffs, the possible complications in the refund process, and the other US tariff strategies that are already ramping up
THE OUTCOME of the legal battle over US tariffs will have significant effects on container demand and trade flows in 2026.
For ocean shipping, which stands at the crossroads of the world economy, there’s an even broader potential impact. The ruling could expand the powers of US President Donald Trump to such an extent that tariffs on goods will be only part of the geopolitical problem.
In an online panel on Tuesday presented by the Budget Lab at Yale, trade policy experts outlined the potential consequences of the case, the likely timing of the ruling, the outlook for tariff refunds, and how Trump will use other tariff powers should the US Supreme Court (SCOTUS) rule against him.
SCOTUS will hear oral arguments on November 5 and a decision is expected shortly thereafter.
“The counsel for one of the plaintiffs told me they expect a decision before Thanksgiving,” said Stan Veuger, senior fellow of economic policy studies at the American Enterprise Institute.
Scott Lincicome, vice president of general economics at the Cato Institute, heard that a decision is expected in early December.
“If we’re going to get a ruling against tariffs, it’s going to come quickly,” said Peter Harrell, fellow at the Carnegie Endowment for International Peace. “If we get into the spring and there’s no ruling, that’s a pretty strong signal that the court is going to uphold the tariffs.”
Lincicome believes the outcome is a “coin toss”.
“Even if, on the legal merits, they might want to decide for the plaintiffs, maybe they’ll find a way not to,” he said, adding that the ruling might not be a simple “yes” or “no”.
“There are an almost infinite number of ways the court could ‘half the baby’ here. Maybe the fentanyl tariffs are okay, but the global reciprocal tariffs, which aren’t even reciprocal, are not. This may not be the nice, clean ruling we’d all like to see.”
Veuger, like Lincicome, believes it “is really going to be close”, particularly if partisan politics plays a role in the judges’ decisions.
Harrell is more optimistic that Trump will lose. “I actually don’t think it’s a coin toss. I think the court is significantly more likely than not to strike down the tariffs. I don’t think it’s a 90-10 kind of call, but probably in the 70% range,” he said.
Natasha Sarin, president of the Budget Lab at Yale, said that the “major-questions doctrine” will be pivotal. Veuger agreed that this is “the elephant in the room”.
The major-questions doctrine is a conservative policy limiting executive branch overreach, holding that executive actions with “vast economic and political significance” are illegal if they are not clearly authorised by Congress or the Constitution.
SCOTUS and chief justice John Roberts have wielded the major-questions doctrine to strike down multiple policies of former Democratic presidents Joe Biden and Barack Obama.
Tariff regulations are promulgated by Congress, and Trump has many options under those laws.
The International Emergency Economic Powers Act of 1977 (IEEPA) — which Trump has used for his fentanyl and reciprocal tariffs — makes no mention of the word “tariff”, only the right to regulate the importation and exportation of property amid a national emergency.
“There is a whole set of statutes the court can point to in its ruling, noting that they are not saying the president does not have any delegated authority, only that IEEPA is not a delegated tariff authority and the president has to follow the processes and procedures Congress has laid out,” said Harrell.
Presidential power could expand beyond tariffs
If SCOTUS approves Trump’s use of IEEPA for tariffs, it would open up a Pandora’s box of wider presidential powers, Harrell warned.
“This is an incredibly important case,” he said. “It’s not just about whether the president has unbounded power to impose tariffs on imported goods, it’s about the president’s power to regulate America’s connection to the international economy writ large.
“Once you open the door to this with IEEPA, it suggests you could tax anything coming in and out of the United States,” he said. “Property” is not just physical goods; it’s also money and services.
Trump could have carte blanche to implement capital constraints, tariffs on foreign services, tariffs on cross-border flows from foreign investments in the US, and tariffs on US-based companies that derive income from investments outside of the country.
