The Supreme Court ruling will trigger two massive waves of litigation. First, hundreds of thousands of companies will sue for refunds on billions in illegally collected tariffs. Second, new tariffs imposed under different authorities will face country-by-country legal challenges, creating a sustained boom for trade lawyers.
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Despite a Supreme Court ruling against the president's broad reciprocal tariffs, the administration is expected to re-impose them using more targeted, sector-specific legal authorities. This means economic relief from lower tariffs will be short-lived, as the underlying protectionist policy stance remains.
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.
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.
The Supreme Court didn't eliminate all presidential tariff authority. It only ruled that the IEPA statute, used for two-thirds of his tariffs, does not grant this power. This leaves him able to use other laws, like Section 122 of the Trade Act, to reimpose tariffs, albeit with more constraints and difficulty.
A contrarian investment opportunity exists in purchasing the legal claims from companies that paid tariffs under the Trump administration. These claims can be bought for 10-15 cents on the dollar, offering a significant return if the Supreme Court deems the tariffs unconstitutional and mandates a full refund from the government.
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.
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.
If tariffs are reduced following a court ruling, companies will experience immediate cost relief. However, these savings are passed to consumers slowly, over two to three quarters. This delay creates a temporary tailwind for corporate profit margins before prices on the shelf fall.
The impending 107% tariff on Italian pasta is based on legally sound anti-dumping laws targeting a specific product. This is distinct from Trump's broader, country-specific tariffs, which were enacted via a national emergency declaration and are more likely to be struck down by the Supreme Court. This signals a key legal risk difference for global businesses.
Following the ruling, Trump immediately invoked Section 122 of the Trade Act to impose a 10% tariff. This authority is limited—up to 15% for only 150 days. This creates a ticking clock for his administration to build more complex legal cases under other statutes, like Section 301, to make the tariffs permanent.