A cargo ship sits in New York Harbor on Nov. 19, 2025 in New York City.
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The U.S. Supreme Court on Friday could rule on the legality of President Donald Trump‘s tariffs, a decision poised to have far-reaching impacts on not only trade policy, but also the U.S. fiscal situation.
Though it’s not certain that the high court will make its ruling, it has scheduled Friday as a “decision day” for handing down opinions, and there is widespread speculation that the tariff case will come up.
At its core, the ruling 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.
However, the final decision could also fall somewhere in between.
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
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,” he added. “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. However, he also has worried that reimbursements could place a strain on the administration and its effort to drive down the fiscal deficit. Tariffs brought in some $195 billion in fiscal 2025 and another $62 billion in 2026, according to Treasury data.
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.
“We do think there’s scope for the administration to take a lighter-touch approach to the overall tariff regime given a recent political focus on affordability,” they added.
The tariff impact thus far has defied analyst projections: There’s been a limited impact on inflation, while the trade deficit has plunged, countering expectations in some quarters that the tariffs could make the U.S. a pariah on the global trading stage. The trade imbalance for October hit its lowest level since the end of the financial crisis in 2009, at a time when imports had declined sharply due to the massive recession the crisis generated.
