Supreme Court Could Rule on Tariffs as Early as This Week. What to Know.

The implications of the Supreme Court’s ruling on tariffs are huge. Above, a view of the court in Washington, D.C. (Jim WATSON / AFP via Getty Images)

Key Points

• The Supreme Court may soon rule on the legality of President Donald Trump’s tariffs, potentially impacting trade policy and the fiscal deficit.
• A ruling against the administration could threaten Trump’s trade policy and raise questions about the government’s budget deficit.
• The tariffs are estimated to generate $158 billion in revenue this year and could help reduce the fiscal deficit by $3 trillion by 2035.

The Supreme Court could render a decision as early this week, possibly Thursday, on the legality of tariffs at the center of President Donald Trump’s economic agenda, potentially opening a new can of worms about trade policy, refunds, and the fiscal deficit.

The timing of a decision on whether Trump has the unilateral power to issue tariffs under the International Emergency Economic Powers Act is unknown. But U.S. Trade Representative Jamieson Greer has said he expects a decision by year-end, and the court typically issues decisions on Mondays or Thursdays.

Veda Partners’ director of economic policy, Henrietta Treyz, is bracing for a decision that could come as early as this week or next, noting that it took 35 days for lower courts to decide Trump’s use of the act for tariffs was invalid.

The implications are huge. A ruling against the administration would not only threaten the core of Trump’s trade policy, it would also raise new questions for investors about the government’s budget deficit and might trigger payments to some big companies. Trump said in a social media post early Tuesday that a decision against the administration would leave the U.S. “ financially defenseless.”

While decisions typically are issued around 10 a.m., that isn’t set in stone.

Treyz says it’s possible Justice John Roberts would want more time to ensure a verdict with a wider margin of support among the justices. That would make a stronger point for the president, and help avoid further dinging the credibility and stature of the Supreme Court. A Gallup poll Tuesday found that 52% of Americans say they disapprove of the way the highest court is handling its job, a 16-point drop since 2020, Treyz says.

“The magnitude of this question, with $3 trillion on the line and a sitting President’s entire foreign policy agenda at risk, we suspect that Chief Justice Roberts will try to corral as many of the Justices into one camp as possible,” Treyz says in a note to clients.

The early takeaway from oral arguments held in November was that there was skepticism about some of the administration’s claims among several justices. Treyz’s take: The case likely hinges on what Justices John Roberts, Neil Gorsuch, and Amy Barrett decide, as the others seem firmly on one side or the other.

Ryan Majerus, a partner at King & Spalding and former U.S. trade official, says that if the decision doesn’t come in the next week, it likely it would arrive in the spring. “The narrower the scope of the decision, the more likely we will see it sooner,” he adds, noting that it isn’t clear whether the court will address all the constitutional issues in the case.

If the Supreme Court rules against the administration’s use of IEEPA for tariffs, investors should focus on how narrow the limitations are. “Is it a blanket no, or is it a situation where the Justices try to distinguish based on the underlying emergency, as they are reviewing both the fentanyl and reciprocal tariffs, which some have speculated could be treated differently,” says Owen Tedford, an analyst at Beacon Policy Advisors.

Also important is how long the administration has to be compliant. While Treasury Secretary Scott Bessent and others have described multiple other avenues to rebuild the tariffs, analysts say they may not do so immediately given voters’ angst over rising prices and the cost of living.

For the myriad businesses hit by tariffs and investors worried about the fiscal deficit, the big question will be what the court says about refunds. The issue will be whether the government has to give back all the tariffs collected, how it does this, and who can collect rebates.

Costco Wholesale is among the highest-profile companies who have filed suit with the U.S. Court of International Trade seeking relief. Lawyers say that other companies seeking relief will need to file by Dec. 15 to preserve their right for refunds, if they become available.

The Tax Foundation estimates the tariffs will bring in $158 billion in revenue this year. The Congressional Budget Office has estimated that if the tariffs remain in place through 2035, it would help reduce the fiscal deficit by $3 trillion. That would offset some of the increase in the deficit from the tax and spending bill passed earlier in the year.

A ruling against the administration could also rattle bond investors, especially as Trump has identified several uses for the tariff revenue, including a $12 billion bailout for farmers, who have been hit hard by his administration’s trade policy. China, the biggest consumer for U.S. soybeans, shifted its purchases to Brazil and Argentina, though a recent detente included an agreement for China to resume some purchases.

Write to Reshma Kapadia at reshma.kapadia@barrons.com