Trump’s Tariffs Aren’t Going Away – Supreme Court Ruling May Not Even Matter

Think President Trump’s tariffs are transient? You might want to think again. Yes, there’s a Supreme Court case happening right now over whether or not the president has the authority to impose tariffs as President Trump has done; however, even if the ruling goes against the president and his tariffs, it may not matter.

In a New York Times (NYT) sit-down interview, Treasury Secretary Scott Bessent talked about the administration’s backup plans to maintain the tariffs should the case go against it. Having given it leverage to negotiate new trade deals with nations around the world, the tariffs are extremely important to the Trump Administration:

Secretary Bessent clearly wants America’s trading partners to know they shouldn’t count on the courts removing U.S. tariffs on their goods. He says the administration will be able to replicate the tariff power President Trump has derived out of the International Emergency Economic Powers Act (IEEPA) from other places in U.S. law.

The Legal Battle: IEEPA Under Scrutiny

In a post about the Supreme Court hearing oral arguments on the case, Universal Cargo’s blog has previously gotten into the details of the legal battle. But we’ll give a quick overview here.

At the heart of the Supreme Court case is President Trump’s use of IEEPA to justify tariffs on virtually all trading partners. The president declared national emergencies over the fentanyl crisis and trade deficits, then used IEEPA to impose “reciprocal tariffs.”

A federal appeals court ruled in August that these tariffs exceeded presidential authority, but the ruling’s appeal was fast-tracked to the most powerful court in the land. The Supreme Court heard oral arguments on November 5th. Secretary Bessent found arguments against the tariffs absurd, pointing out a particular moment from the case in his NYT interview:

I think it was Justice Alito who said, “So you believe that the president of the United States has the right to put on an embargo but not a 1% tariff?” And [the plaintiff] said, “Yes.”

In the aforementioned blog post, we got into that argument, which Justice Kavanaugh called an “odd donut hole” that lacked common sense for Congress to put into the law. The post got into other arguments surrounding the legality of President Trump’s tariffs too. Those included the tariff power Trump invoked as violating America’s separation of powers by breaking the “non-delegation doctrine” and/or the “major questions doctrine.”

To my mind, it would likely take a majority of the justices agreeing with one of those latter doctrinal arguments (here’s the link again to our blog that explains them) for the Supreme Court to rule against the tariffs.

An Arsenal of Alternative Authorities

Let’s say the Supreme Court does rule against the tariffs. Secretary Bessent and the Trump Administration seem locked and loaded with other options to authorize the tariffs.

This is where Secretary Bessent’s strategic confidence comes from. He has repeatedly emphasized that the administration possesses multiple statutory tools to “recreate the exact tariff structure” if the Supreme Court invalidates the IEEPA tariffs. Here’s how he said it in the NYT interview:

We can recreate the exact tariff structure with [sections] 301, with 232, with 122.

And when Andrew Ross Sorkin asked him in the interview if these would be permanent measures, Bessent replied with a simple “Permanently.”

The Backup Plan Laid Out

Let’s quickly cover the Trump Administration’s backup plan. Along with sections 301 and 122 of the Trade Act of 1974 and section 232 of the Trade Expansion Act of 1962, Bessent also has section 338 of the Tariff Act of 1930.

Here’s a quick outline of how each piece of law would be used for tariffs:

Section 301 of the Trade Act of 1974 grants the president broad authority to impose tariffs in response to unfair trade practices by foreign countries. This provision has already been used extensively for tariffs on Chinese goods and provides substantial discretion without strict time limits.

Section 122 of the Trade Act of 1974 permits the president to impose temporary tariffs (up to 150 days) to deal with large or persistent balance of payment deficits.

Section 232 of the Trade Expansion Act of 1962 allows the president to adjust imports that threaten national security. President Trump used this authority in his first term for steel and aluminum tariffs, and courts have generally upheld presidential determinations under this section.

Section 338 of the Tariff Act of 1930 (Smoot-Hawley) might be the most intriguing alternative. This statute allows the president to impose additional duties of up to 50% on countries that discriminate against U.S. commerce. Legal experts have noted this authority has gone unused for decades but remains available.

Why the Supreme Court Case Might Still Matter

Despite Bessent’s confidence about alternative paths to impose the tariffs, a Supreme Court loss could possibly create significant consequences. If the other statutes are determined not to be able to be applied retroactively to replace IEEPA as the source of authority, the government could be forced to issue significant refunds on tariffs it collected. We’re likely talking about billions of dollars in refunds.

Bessent previously acknowledged that the Trump Administration would have to issue a refund on about half of the tariffs it imposed should the Supreme Court case go against it.

Conclusion

Shippers shouldn’t get too excited over the idea of the Supreme Court ruling against the tariffs. Personally, I think it’s more likely the Supreme Court will rule in the Trump Administration’s favor than against it. However, if the ruling does go against the president having the authority through IEEPA to impose tariffs as President Trump has done, it’s likely the administration will simply shift its source of authority to do so to other laws.

Shippers should still be ready to apply for tariff refunds in the event the Supreme Court rules against the tariffs. Exactly what that process would look like is unclear. Refunding billions in tariffs collected would likely be quite complicated.

Ultimately, I wouldn’t expect the tariffs to go anywhere. They’re a core part of President Trump’s policies. He uses them to negotiate for peace deals as well as trade deals, and lately he’s been talking about using their revenue not only to reduce the national debt but to issue dividend payments to U.S. citizens, increase tax refunds, and even eventually replace federal income taxes.

As much as has been collected in tariffs so far, I’m not sure they would ever reach the revenue numbers to do all of that. But I wouldn’t mind being wrong about that.