The U.S. Supreme Court will issue a ruling Friday on tariffs put in place by the Trump administration under the International Emergency Economic Powers Act (IEEPA), with the future of tariffs targeting China, Canada, the European Union, and other large economies hanging in the balance. Lower courts have already rejected the president’s use of IEEPA to impose his country-specific tariffs. However, experts warn that a Supreme Court win for the Trump administration could grant the president the ability to impose taxes with the same level of authority and scope as he did with the tariffs at the center of the case.
“The law in question here—IEEPA—isn’t limited to imports; it gives the president the power to regulate imports, exports, sales, use, holding, and a wide range of other activities,” Timothy Meyer, a professor of international business law at Duke University, told . “If the government prevails based solely on this interpretation of the law, the president would be able to levy taxes—including sales taxes and property taxes.”
Meyer notes that because the case’s core revolves around the president’s authority to regulate imports—and the government contends that regulation includes the power to impose tariffs to shape behavior—the same reasoning would let the president use taxes to achieve regulatory objectives.
“If the president can impose taxes under a law that doesn’t even mention taxes,” Meyer stated, “we’re entering a realm where the president will feel empowered to do almost anything based on vaguely worded laws.”
This case represents the latest challenge to the president’s executive authority and is the Supreme Court’s first major decision of the new year. While the justices’ ruling is uncertain, a victory for the Trump administration could have far-reaching, long-term effects on the power of the executive branch.
That said, some legal experts and investors expect a partial or complete rejection of the president’s IEEPA tariffs, as the during arguments over the president’s authority to impose such taxes without congressional approval.
How the Supreme Court may rule
Such a decision would disrupt Trump’s tariff strategy and could benefit markets, as it would mean the average effective tariff rate would drop even more from its current estimated 12%.
Still, some experts don’t think removing the tariffs would have a major impact on the market.
“The fundamental tariff system isn’t going to change drastically because of this decision,” Benn Steil, director of international economics at the Council on Foreign Relations, told .
Even if the IEEPA taxes are struck down, the administration has other legal grounds to impose levies—such as on goods the president considers a national security risk or via short-term tariffs. Trump aides have suggested the administration would turn to other executive tools to carry out the president’s tariff plan. This means that no matter how the Supreme Court rules, little may actually change.
Replacing the IEEPA levies with other tariffs would be time-consuming, though. Instead of the broad tariffs imposed under IEEPA, the administration would have to impose tariffs on each country and each specific product one by one.
“The key difference is that those other laws all have certain limits,” Meyer explained. “They usually require at least a minimal investigation and findings from an administrative agency before the president can take action.”
How reimbursements could play out
If the Supreme Court invalidates the tariff plan, it’s unclear exactly when refunds would reach individuals. The timeline for IEEPA tariff reimbursements could be pushed back if the government slows the process to avoid paying.
“The Supreme Court won’t tell the government how to handle repayments,” Steil noted. “The government could potentially make it as hard as possible to claim a refund.”
Business leaders have as “very complicated,” given it would involve a lengthy, demanding process to calculate what recipients are owed.
Another factor to watch for in the justices’ decision is who will be eligible for reimbursement. During oral arguments, Justice Amy Coney Barrett questioned whether the government is required to reimburse all parties impacted by the tariffs, suggesting instead that only the case’s plaintiffs might get refunds. While this would be out of the ordinary, Steil says such a ruling could prevent significant market shifts.
“That would be historically uncommon, but it would ease any concerns Wall Street might have about the fiscal consequences,” Steil stated.