The Supreme Court is currently deliberating on the fate of President Trump’s tariffs, which are based on a claimed economic emergency power. This critical decision could potentially unravel one of his administration’s most significant policy actions.

If the tariffs are upheld, it would signal an extraordinary expansion of presidential authority. However, if they are overturned, it could lead to numerous challenges for Trump, ranging from mass financial reimbursements to the need to identify new legal justifications to support his policy goals.

As Supreme Court Justice Amy Coney Barrett aptly put it, the consequences of such a decision could result in “a mess.”

Refunds for companies

The Trump administration itself has admitted that a negative ruling from the Supreme Court would necessitate issuing refunds for the billions in tariff revenues already collected.

In a bid to manage potential fallout, lower courts were persuaded to delay their decisions that had invalidated the tariffs. This pause was partially due to worries that issuing refunds might be premature if the Supreme Court later deemed the tariffs lawful, complicating efforts to recover the distributed funds.

Refunds for the group of small businesses challenging Trump’s tariffs at the high court would be the most straightforward; the administration already agreed to pay them back if it loses. 

As for the others, Neal Katyal, who represented the businesses at the argument, told Barrett “it’s a very complicated thing” that involves formal protests and administrative procedures. 

“So, a mess?” Barrett responded. 

Katyal replied, “So, it’s difficult, absolutely.” 

U.S. Trade Representative Jamieson Greer told Fox News on Thursday that he’ll “hand that file” to the Treasury Department to process refunds if the court rules for the challengers. 

“You’ll have all these importers and importing interests who are going to want that money back,” Greer said. “And so, we’ll have to figure out probably with the court what kind of a schedule might look like and what are the rights of these parties and what rights the government has to that money.” 

Following the argument, businesses have already piled on new lawsuits in the Court of International Trade to ensure they’re in place. 

“This separate action is necessary, however, because even if the IEEPA [International Emergency Economic Powers Act] duties and underlying executive orders are held unlawful by the Supreme Court, importers that have paid IEEPA duties, including Plaintiff, are not guaranteed a refund for those unlawfully collected tariffs in the absence of their own judgment and judicial relief,” Turn5, an auto parts e-commerce business, wrote in a lawsuit filed Thursday. 

The government has confronted the problem before, after the Supreme Court in 1998 struck down a harbor maintenance tax as unconstitutional. It led to a new round of litigation that lasted roughly two years as companies fought for refunds. 

But that battle involved only about $750 million, far less than the billions of dollars already collected under Trump’s new levies. Greer told Fox News the “reciprocal” tariffs are already more than $100 billion. 

Trump has said a loss would turn the United States into a “third-world country” and casts the case as a life-or-death moment. He reiterated his concerns following the Supreme Court arguments, where justices appeared skeptical of the administration’s arguments, when asked about his plans should the high court rule against the White House.

The president contended the government would have to pay back “trillions of dollars” because it’s taken in as much from the tariffs. A loss would also affect trade deals his administration made based on projected trade earnings, he said.  

“I’m going to hope that we win,” Trump said Thursday. “I can’t imagine that anybody would do that kind of devastation to our country.” 

Once resolved, the funds would go back into the companies’ coffers, because they were legally liable to front the costs. But Americans who paid inflated prices because of the tariffs would likely not see the money return to their pockets.

Seek out new tariff options

An adverse Supreme Court decision could bar Trump from invoking the 1977 International Emergency Economic Powers Act (IEEPA) to implement the bulk of his sweeping tariff agenda. 

It would force the president to seek out other statutes to effectuate his overhaul of global trade.  

“There is a whole host of statutes in the tariff architecture of Title 19, which both expressly confer the power to tariff and always impose clear limits,” Katyal said, referring to the section of law that deals with customs duties.  

Katyal listed several options, including sections 122, 201 and 301 of the Trade Act of 1974, and Section 338 of the Tariff Act of 1930. Later in the argument, he referenced Section 232 of the 1962 Trade Expansion Act, as well. 

Under Section 122 authority, Trump could impose tariffs up to 15 percent for up to 150 days over unbalanced trade, though it has not been used before. 

The president could invoke Section 201 authority to impose duties if an increase in imports is causing or threatening “serious injury” to American manufacturers, after the U.S. International Trade Commission has investigated and made findings. 

Using Section 232 authority, Trump could impose restrictions on imports if the U.S. secretary of Commerce determines, after an investigation, that some circumstance of those imports “threaten to impair” national security.  

Trump could direct the Office of the U.S. Trade Representative to impose tariffs as an enforcement measure of American rights under trade agreements and in response to certain foreign trade practices, following the office’s investigation, using Section 301 authority. 

And by invoking Section 338 authority, the president could place tariffs on imports “whenever he shall find as a fact” that the foreign nations impose “unreasonable” charges or discriminate against U.S. commerce. Those levies may not exceed 50 percent. No president has used that measure, either. 

“You can recreate some of what they want to do,” said John Yoo, a University of California, Berkeley professor and former clerk to Justice Clarence Thomas, at a panel during the Federalist Society’s annual conference.  

Nazak Nikakhtar, partner and chair of the firm Wiley Rein’s national security practice, noted at the same event that every trade statute that allows the president to tariff “expressly says ‘duties’” and spells out a process. 

“IEEPA looks very different, and I think based on textual [arguments], the president is likely to lose,” she said. 

Justice Samuel Alito said during Wednesday’s argument that it’s a “realistic possibility” for the administration to try a new approach.  

But Trump would then attempt to collect the tariffs under a new legal authority and, inevitably, the plaintiffs would take him back to court.  

“And it would have to progress through those lower courts and come back to us when — a year from now? Six months from now? While the tariffs continue to be collected, and the amount that’s at stake mounts into the billions?” the conservative justice said. 

“I mean, what are we at now, a hundred billion? We get up to — up to a trillion?” he continued. “That’s what you’re suggesting?”