Should the administration lose the Supreme Court case, it might shift to product-specific tariffs. This transition could introduce short-term market volatility, as the administration might initially propose high tariff levels as a negotiating tactic before settling on lower, more palatable rates.

Most proposed affordability measures like tax credits or subsidies offer only micro-level relief to households and won't change the broader economy. Tariff policy is the significant exception. Lowering tariffs would have a sustained impact by directly reducing inflation, supporting real income growth, and potentially enabling the Fed to cut interest rates.

A Supreme Court loss on using one specific law (IEPA) for tariffs would not end the administration's ability to wage a trade war. The executive branch has other laws it can use to impose levies, such as those allowing temporary or retaliatory tariffs, limiting but not eliminating its power.

Even if the Supreme Court rules against the administration, it may not change U.S. tariff levels. The executive branch has alternative legal authorities, like Section 301, that it can use to maintain the same tariffs, making a court defeat less of a market-moving event than it appears.

Stocks most affected by tariffs showed a muted reaction to a pending Supreme Court decision. This suggests investors believe the executive branch could use other authorities to maintain tariffs and that any potential refunds from an overturn would take years to materialize, diminishing the news's immediate market impact.

The public is unlikely to approve government guarantees for private AI data centers amid economic hardship. A more palatable strategy is investing in energy infrastructure. This move benefits all citizens with potentially lower power bills while still providing the necessary resources for the AI industry's growth.

While the base case is that the President would replace tariffs struck down by the Supreme Court, there's a growing possibility he won't. The administration could use the ruling as a politically convenient way to reduce tariffs and address voter concerns about affordability without appearing to back down on trade policy.

Even if the Supreme Court rules against using emergency powers (IEPA) for tariffs, the President can use a patchwork of other legal authorities like Sections 122, 232, and 301. While this would curtail the ability to impose tariffs on a whim, it would still allow the administration to replicate the revenue effects.

Given a tight legislative calendar and procedural hurdles in Congress before an election, sweeping legislation is improbable. The administration is more likely to rely on executive actions, like agency directives and tariff policy changes. These tools can be implemented quickly and unilaterally to provide voters with a tangible impact ahead of November.