Introduction to the Tariff Debate
A cargo ship sits in New York Harbor on Nov. 19, 2025 in New York City. The Supreme Court did not rule Friday on the legality of broad tariffs imposed by President Donald Trump, leaving markets still awaiting a decision poised to have far-reaching impacts on trade policy and the U.S. fiscal situation. The ruling, which is expected to address the use of provisions under the International Emergency Economic Powers Act to levy the tariffs, has significant implications for the economy.
There had been speculation that the tariff ruling would be issued on Friday, but the Supreme Court released just one opinion for the day, and it was unrelated to tariffs. It is unclear when the tariff ruling will be released, but when it does come, the decision will address two issues: whether the administration can use provisions under the International Emergency Economic Powers Act to levy the tariffs, and if it isn’t proper, if the U.S. will have to reimburse those importers who already have paid the duties.
Tariff Implications and Possible Outcomes
The court has the option to grant limited powers under the IEEPA and require only limited repayment, along with multiple other options for how it handles a touchy matter that is being closely watched on Wall Street. Moreover, even should the White House lose the case, it has other tools in its chest to implement tariffs that don’t require the emergency powers cited under the act. Treasury Secretary Scott Bessent himself said Thursday he expects a “mishmash” ruling.
“What is not in doubt is our ability to continue collecting tariffs at roughly the same level, in terms of overall revenues,” Bessent said during an appearance in Minneapolis. “What is in doubt, and it’s a real shame for the American people, was the president loses flexibility to use tariffs both for national security, for negotiating leverage.” Trump used the IEEPA in part as an emergency measure to stop the inflow of fentanyl to the U.S.
The Impact of Losing the Tariff Case
Losing the tariffs would have multiple ramifications, said Jose Torres, senior economist at Interactive Brokers. “If the court blocks the tariffs, the administration is going to find workarounds,” Torres said. “President Trump is very ambitious in getting this agenda through despite potential controversies that could surround such a decision.” Blocking tariffs would be bad for onshoring ambitions, it would be bad for fiscal conditions, rates would go higher, but it would be good for corporate earnings, input prices would be lower and trade would be smoother.
Administration officials have cited a number of options to offset the court’s decision should it not go their way. Prediction markets site Kalshi is pointing to just a 28% probability that the court will rule in favor of the tariffs as implemented. Torres said his firm’s clients have a similar expectation. Bessent has said that the administration has at least three other options through the 1962 Trade Act that will keep most of the tariffs in place.
Conclusion and Next Steps
Ultimately, Morgan Stanley analysts “see significant room for nuance” in the Supreme Court decision. The court “has wide latitude when it comes to issuing decisions, a range of outcomes is possible, like the Court narrowing the scope of existing tariffs but not mandating their full removal or limiting the future application of tariffs,” Morgan Stanley analysts Ariana Salvatore and Bradley Tian said in a note. For more information on the topic, you can visit Here
Smart Tip for Readers
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