The US Supreme Court may make a big decision on the validity of tariffs (import duties) imposed by President Donald Trump on Friday. If the court pronounces its verdict on this case today, it will have far-reaching effects not only on trade policy, but also on the economic position of the United States and the government treasury.
Although it is not certain that the Supreme Court will give a decision today, but the court has fixed “decision day” on Friday, that is, on this day, decisions can be pronounced on many important cases. For this reason, speculations are rife that this case related to tariff may also come up today.
Two big questions before the court
In this case, the Supreme Court will mainly consider two important questions:
- Can the Trump administration use emergency powers under the International Emergency Economic Powers Act (IEEPA) to impose tariffs?
- If the court finds that this method was not correct, will the money be returned to those importers who have already paid these fees?
However, the court’s decision may be somewhere between the two. The court may, if it wishes, recognize limited rights under the IEEPA and order only a partial refund.
Wall Street eyes the verdict
This case is very important for Wall Street and big investors. The Supreme Court has complete freedom to decide on this sensitive issue and the outcome can be many ways. Even if the court rules against the White House, the Trump administration still has other ways to implement tariffs that would not necessarily require resorting to emergency legislation.
What did the Treasury Secretary say?
US Treasury Secretary Scott Besant said on Thursday that he expects a “mishmash ruling” from the court. He said, “There is no doubt that we will continue to collect revenue from tariffs at roughly the same level overall. But what is uncertain, and what will be unfortunate for the American people, is that if the president loses, he will have less freedom to use tariffs for national security and pressure in negotiations.”
Trump also used the IEEPA in part to stop the smuggling of dangerous drugs like fentanyl into the US.
If Trump loses, what will be the effect?
According to Jose Torres, Senior Economist at Interactive Brokers, if the court halts the tariff, it will have several implications. He said, “If the court blocks the tariffs, then the administration will definitely come up with some alternative way. Trump is very aggressive about his agenda, regardless of the controversy.”
According to Torres, stopping the tariff will harm manufacturing (onshoring) in America. The government financial position will be affected and interest rates may increase but on the other hand the earnings of companies may increase as the cost of raw materials will be lower and business will be more smooth.
Is it more likely to go against the decision?
According to prediction market site Kalshi, there is only a 28% chance that the Supreme Court will rule in favor of the tariffs as they currently stand. Torres says that his company’s clients are also thinking about this.
The government still has options
Scott Besant said the Trump administration has at least three other options under the Trade Act of 1962, which would leave most of the tariffs in place. However, he also expressed concern that if the court ordered the refund, it would place a heavy financial burden on the government and undermine efforts to reduce the budget deficit.
According to Treasury figures:
- In fiscal year 2025, the tariff generated about $195 billion
- So far in FY 2026, revenues of $62 billion have come in
Opinion of Morgan Stanley
Analysts of Morgan Stanley say that there may be a lot of “nuance” in the Supreme Court’s decision. According to analysts Ariana Salvatore and Bradley Tian, ”the court could limit the scope of the tariffs or ban their future use, without ordering a complete elimination.” He also said that due to increasing political pressure regarding inflation and the affordability of the common people, the government may go ahead and adopt relaxation in the tariff policy.
How has the impact of the tariff been so far?
So far, the impact of the tariffs has been different from what many analysts expected:
- There has been a limited impact on inflation
- The US trade deficit has fallen sharply
In October, the US trade deficit fell to its lowest level since the 2009 global financial crisis. At that time there was a sharp decline in imports, which is still being observed.