Treasury Secretary Highlights Financial Risks if Supreme Court Strikes Down Trump Tariffs
Treasury Secretary Scott Bessent has expressed confidence that the Supreme Court will uphold the legality of President Donald Trump’s tariff program. However, he cautioned that a ruling against the tariffs would compel the Treasury Department to issue substantial refunds, posing a significant fiscal challenge.
Speaking on NBC’s “Meet the Press,” Bessent stated, “If the court says it, we’d have to do it,” referring to the prospect of refunding approximately half of the tariffs collected. He described such a scenario as “terrible for the Treasury.”
Legal Battle Over Reciprocal Tariffs
The Trump administration recently petitioned the Supreme Court for an expedited ruling to overturn a federal appeals court decision that deemed most of the president’s “reciprocal tariffs” unlawful. The U.S. Court of Appeals for the Federal Circuit ruled that Trump exceeded his presidential authority by imposing tariffs on nearly all countries as part of his “liberation day” announcement.
Typically, the Supreme Court could take until mid-2026 to decide on the matter. Bessent warned that such a delay could lead to $750 billion to $1 trillion in tariffs being collected, complicating any eventual unwinding process and potentially causing significant market disruption.
Scope and Impact of Tariffs
Before the court challenges, Trump’s tariffs covered nearly 70% of U.S. goods imports, according to the Tax Foundation. The appeals court ruling, if upheld, would reduce that coverage to roughly 16%.
The potential requirement to refund tariffs on this scale would represent an unprecedented financial reversal benefiting businesses and entities that paid the duties.
Administration’s Contingency Plans
Despite confidence in the Supreme Court ruling in their favor, administration officials are preparing alternative strategies should the tariffs be invalidated. National Economic Council Director Kevin Hassett indicated on CBS News’ “Face the Nation” that other legal avenues, such as imposing tariffs under Section 232 of the Trade Expansion Act of 1962, remain available.
Section 232 authorizes presidential tariffs to protect national security interests following trade investigations. The Trump administration has previously expanded 50% steel and aluminum tariffs to over 400 product categories and threatened tariffs on semiconductors and pharmaceuticals.
Recent Trade Policy Changes and Effects
Separately, the administration eliminated the “de minimis exemption” on imports valued at $800 or less, which exempted low-cost goods from tariffs. This policy change has led to an over 80% decline in postal imports to the U.S., according to the Universal Postal Union, as international postal operators seek clarity on compliance.
FinOracleAI — Market View
The Supreme Court’s decision on Trump’s tariffs carries significant fiscal and market implications. Upholding the tariffs would maintain current revenue streams and trade policy stability. Conversely, invalidation could force large-scale refunds, disrupting Treasury finances and potentially unsettling import-dependent sectors.
The administration’s contingency plans, including invoking Section 232 tariffs, may mitigate some risks but could prolong trade uncertainty. Market participants should closely monitor court developments and any shifts in U.S. trade policy enforcement.
Impact: negative
