Supreme Court ruling against Trump on IEEPA wouldn't mean the end of all tariffs, experts say

Trade experts predict that high U.S. tariffs will likely persist even if the Supreme Court rules against President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose them, following justices' apparent skepticism regarding his authority. While an adverse ruling could trigger billions in refunds for businesses, which have paid nearly $89 billion in IEEPA tariffs, the administration is expected to pivot to other, albeit more cumbersome, legal frameworks like Section 232 or Section 301 to maintain elevated import duties. This outcome suggests continued trade policy uncertainty and a sustained high-tariff environment, potentially impacting business investment and hiring, rather than a significant reduction in overall tariff levels.

Analysis

The Supreme Court's potential ruling against President Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) for tariffs is unlikely to fundamentally alter the U.S. high-tariff environment, according to trade experts. Justices' skepticism regarding IEEPA authority suggests a potential adverse ruling, yet the administration is expected to pivot to alternative legal frameworks such as Section 232 or Section 301 to maintain elevated import duties. This indicates a sustained protectionist trade stance, irrespective of the IEEPA outcome.

An adverse ruling could necessitate billions in refunds for businesses, with importers having paid nearly $89 billion in IEEPA tariffs through August. However, the alternative tariff mechanisms (Sections 232 and 301) are described as more cumbersome and time-consuming, potentially taking months to implement compared to weeks under IEEPA. This procedural shift could introduce operational delays and increased compliance burdens for businesses navigating trade policy changes.

The prevailing sentiment is "uncertain," with a "moderately negative" sentiment score of -0.5, reflecting concerns about trade policy stability. Oxford Economics suggests that while a ruling against IEEPA might not significantly alter long-term tariff forecasts, it could heighten near-term uncertainty, potentially leading to lagged impacts on hiring and business investment. The U.S. currently maintains an average tariff rate of 18%, the highest since 1934, underscoring the significant economic backdrop.

Key Decisions for Investors

• Investors should closely monitor the Supreme Court's ruling and subsequent administration actions regarding alternative tariff authorities (Sections 232 and 301) to assess the continuity and form of U.S. trade protectionism.
• Companies with significant import exposure should evaluate their supply chain resilience and potential for increased compliance costs or operational delays if tariff mechanisms shift to more cumbersome processes.
• Businesses that have paid IEEPA tariffs should assess their eligibility for potential refunds, while investors should consider the broader impact of prolonged trade policy uncertainty on corporate investment and hiring decisions.