Supreme Court Tariff Decision Unlikely to Bring Relief to Businesses and Consumers
Businesses and consumers hoping the Supreme Court will eliminate President Donald Trump's massive tariff increases on imports may face continued financial pressure, with administration officials already preparing alternative methods to maintain import taxes regardless of the court's decision.
"That can be done almost immediately," said Clark Packard, a trade researcher with the Cato Institute, highlighting the administration's readiness to implement replacement tariffs.
Unprecedented Tariff Expansion Under Trump Administration
Since returning to office a year ago, President Trump has dramatically expanded America's tariff regime through multiple channels:
- Increased existing tariffs on Chinese imports
- Implemented and expanded tariffs on steel, aluminum, and automobiles
- Created a novel import tax based on the 1977 International Emergency Economic Powers Act (IEEPA) affecting goods from every country worldwide
The cumulative effect has been staggering. The overall average tariff rate has quintupled from approximately 2.2% when Trump took office, resulting in a total tax increase of $181 billion. This represents the largest tax increase since 1993 and ranks as the 13th biggest tax hike since before World War II, according to Erica York, vice president for Federal Tax Policy at the conservative-leaning Tax Foundation.
Constitutional Questions Before the Supreme Court
The Supreme Court is expected to decide this month whether Trump's use of IEEPA to impose tariffs exceeds presidential authority. During oral arguments in November, most justices expressed skepticism about the president's ability to set tariffs without congressional approval, as the Constitution grants Congress sole taxation power.
However, trade experts caution that even an unfavorable ruling for the administration would not necessarily bring tariff relief. "If the court strikes IEEPA down, it does hamstring the ability of the president to set baseline tariffs, but it doesn't mean we're in the clear," York explained.
Administration's Alternative Tariff Mechanisms
The Trump administration turned to IEEPA specifically because it allowed immediate tariff implementation without investigations or comment periods required by other trade laws. This flexibility enabled Trump to adjust rates based on diplomatic conversations, as demonstrated when he reduced tariffs on Indian products from 25% to 18% following discussions with Prime Minister Narendra Modi.
White House economic adviser Kevin Hassett revealed the administration's contingency plan in a Fox Business interview last month: "We also have a backup plan that's really solid. We can put a 10% tariff right away. And then use things like the 301 authorities, the 232 authorities, to backfill."
These alternative mechanisms include:
- Section 122 of the 1974 Trade Act: Allows temporary tariffs of up to 15% to correct trade imbalances for 150 days without congressional approval
- Section 301: Permits retaliatory tariffs against countries with unfair trade barriers, though requires investigation periods
- Section 232 of the 1962 Trade Act: Authorizes tariffs on goods deemed necessary for national security protection
Economic Impact and Implementation Concerns
Tariffs imposed under IEEPA account for approximately three-quarters of new revenue from Trump's trade policies, according to U.S. Customs figures. Losing this authority would mean a sudden loss exceeding $150 billion for 2026.
Despite Trump's frequent claims that exporting countries pay tariffs, economic reality differs substantially. A recent Kiel Institute study found that 96% of tariffs are paid by Americans, with only 4% absorbed by exporters. These costs are either absorbed by companies and shareholders or passed to consumers through higher prices.
Broader Constitutional Implications
Critics express concern about the administration's approach to executive power. Ty Cobb, a former lawyer in Trump's first-term White House, argues that emergency declarations represent a strategic effort to circumvent constitutional limits.
"Phony emergency declarations and false national security claims are at the heart of that strategy," Cobb stated. "Time for the Supreme Court to signal that it understands that important point."
While the Supreme Court's ruling may provide constitutional clarity regarding presidential trade authority, businesses and consumers should prepare for continued tariff pressures regardless of the outcome, as the administration demonstrates both willingness and capability to maintain import taxes through alternative legal mechanisms.
