URGENT UPDATE: The Supreme Court is expected to rule on President Donald Trump’s controversial tariffs in early 2026, prompting the administration to develop contingency plans if the decision does not favor them. This comes after a federal appeals court allowed Trump’s tariffs to remain in place while the case progresses through the legal system.
Trump’s administration is relying on the 1977 International Emergency Economic Powers Act (IEEPA) to justify the tariffs, citing a staggering trade deficit of $1.2 trillion in 2024. White House Press Secretary Karoline Leavitt stated, “Congress created the National Emergency Act to provide a framework to challenge improper IEEPA use.” She emphasized that questions about the legitimacy of these tariffs were already addressed during Congressional hearings.
In a significant move, the Senate recently voted on a Democrat-backed resolution aimed at rescinding Trump’s tariffs. However, Treasury Secretary Scott Bessent assured that the administration has “plenty of revenue alternatives” should the Supreme Court strike down the tariffs, underscoring that economic security is national security. “We are rebalancing trade, aiming to reduce the deficit by several hundred billion dollars this year,” he added.
Despite potential legal setbacks, experts indicate that Trump is prepared to impose tariffs under alternative legal frameworks. Ted Murphy, a trade lawyer, stated, “Nobody thinks the tariffs are going away. They will simply be reissued under a different umbrella.”
The Financial Times reported that the Trump administration may utilize Section 232 of the Trade Expansion Act of 1962, which has previously been used to impose tariffs on sectors like automobiles and metals. Investigations into critical areas such as semiconductors and pharmaceuticals are currently being conducted under this provision, although their findings remain unpublished.
Additionally, Trump could employ Section 122 of the Trade Act of 1974, allowing for temporary tariffs of up to 15 percent to be levied on trading partners, providing an immediate measure while long-term tariffs are being prepared. Another lesser-known option, Section 338 of the Tariff Act of 1930, could impose tariffs of up to 50 percent on countries that discriminate against U.S. commerce.
The implications of a Supreme Court ruling against Trump could have significant repercussions. Analysts warn that such a decision could destabilize the U.S. Treasury bond market, leading to price drops as investors anticipate increased government borrowing. There is also the possibility that tariffs collected under the IEEPA may need to be refunded.
White House representative Kush Desai warned of “enormous” economic and national security consequences if the Supreme Court rules against the administration. He expressed optimism for a “speedy and proper resolution” to the ongoing legal challenges.
As the Supreme Court prepares to deliberate, all eyes are on the potential fallout from this pivotal decision. The outcome could reshape U.S. trade policy and impact millions, making this an urgent issue to watch in the coming months.
