The Supreme Court’s review of Donald Trump’s steel and aluminum tariffs may have significant implications for U.S. trade policy and economic stability. The Trump administration dramatically increased these tariffs by 50%, impacting more than 400 new product categories. According to the Tax Foundation, these tariffs are estimated to cover close to 70% of U.S. goods imports.
The administration’s decision was hugely controversial. This was particularly the case once they removed the “de minimis exemption,” which had allowed U.S.-bound goods valued at $800 or less to slip through tariff nets without cost. This action has greatly reduced international postal traffic into the U.S. The Universal Postal Union recently reported an incredible drop of more than 80%. If the Supreme Court rules against the tariffs, the fallout for duties could be catastrophic. According to Treasury Secretary Scott Bessent, of those only about 16% of the duties would still be in effect.
Through all these planning exercises, the administration appears to be preparing for multiple outcomes. They’re advocating for a quick decision from the Supreme Court to reverse an appeals court ruling that found most of Trump’s tariffs illegal. We anticipate the court to hear arguments on this appeal in early November. Bessent expressed confidence in the administration’s position, stating that he believes Trump’s tariff plan “will win” at the Supreme Court.
Faced with the possibility of bad rulings, the administration has been working on contingency plans. One way you could do this is by imposing tariffs through Section 232 of the Trade Expansion Act of 1962. This statute gives the president expansive powers to impose tariffs to protect national security. Certain levies on low-cost items would still be immune from the court’s ruling.
Bessent cautioned against the enormous economic impact should these tariffs be overturned. “We would have to give a refund on about half the tariffs, which would be terrible for the Treasury,” he said. Her powerful statement emphasizes what’s at risk economically in the Supreme Court’s forthcoming decision.
Kevin Hassett, an economic advisor, acknowledged that “there are other things that could happen should it go that way.” The ambiguity about the tariff’s applicability only further complicates what has already been named a nightmarish trade environment.
As the Supreme Court gets ready to hear that case, it’s certainly unclear what the future holds for Trump’s tariff strategy. The administration is still doubling down on their side, recently arguing that tariffs are needed to protect national security and the economy.
“If the court says it, we’d have to do it.” – Scott Bessent