Even if the US Supreme Court rules against President Donald Trump's use of a key emergency law to impose global tariffs, his administration has several backup legal strategies to maintain its aggressive trade policy, according to an analysis. The ruling, expected in late 2025 or early 2026, could reshape but not necessarily dismantle the tariff regime that defines his economic approach.
The Legal Battle Over Emergency Powers
In April 2025, President Trump declared persistent US trade deficits "an unusual and extraordinary threat to the national security and economy of the United States." This proclamation justified invoking the International Emergency Economic Powers Act (IEEPA) of 1977 to institute sweeping worldwide tariffs. He has also used this law against China's fentanyl trade and threatened Venezuela.
However, lower courts have found that IEEPA does not grant the president the blanket authority he claims. The Supreme Court heard arguments on November 5, 2025, and its decision is pending. Trump has warned that losing the case would lead to economic devastation, claiming, "If we don’t win that case, we will be a weakened, troubled, financial mess for many, many years to come."
The stakes are high financially. The Yale Budget Lab estimates that eliminating tariffs issued under IEEPA would slash the overall effective tariff rate from 17% to 9%. An investment bank, Piper Sandler, estimates potential refunds to firms could reach a substantial $140 billion, or about 0.5% of US GDP.
Trump's Alternative Legal Avenues for Tariffs
Privately, administration officials are reportedly more relaxed, confident in alternative legal tools even without seeking congressional approval. Losing IEEPA would change the shape, but not necessarily the scale, of the tariff wall.
The first and fastest option would be Section 122, a provision allowing the president to impose tariffs of up to 15% for 150 days as a immediate stopgap measure.
Subsequently, the administration would likely initiate investigations through the US Trade Representative and the Department of Commerce. Two powerful authorities could then be invoked:
- Section 301: Allows tariffs on targeted countries following an inquiry. This was the legal basis for Trump's first-term tariffs on China.
- Section 232: Permits tariffs on specific industries deemed critical for national security. Recent levies on cars and steel have used this provision.
While this path is more cumbersome and creates legal vulnerabilities, it would allow Trump to "rebuild his tariff wall brick by brick." A more aggressive, untested option is Section 338 from the 1930s, which allows retaliatory tariffs of up to 50% on countries with "unreasonable" trade practices without lengthy investigations.
Economic Uncertainty and Political Calculus
The flexibility of IEEPA has been its greatest asset. Commerce Secretary Howard Lutnick has noted that other tools "are procedurally time-consuming and do not allow for immediate action." A ruling against IEEPA would force a complex, protracted, and confusing policy rejig, injecting fresh uncertainty into global trade.
This prolonged ambiguity has real economic costs. Many businesses, especially manufacturers, have delayed hiring and investment decisions, waiting for more predictable trade rules. Extending this period of limbo would do little economic good, even if the Supreme Court curbs presidential whims.
Interestingly, some investors speculate the administration might not entirely mind losing the case. Massive tariff refunds could act as a form of backdoor fiscal stimulus, potentially boosting the economy ahead of the 2026 midterm elections. However, such an outcome would require a significant shift in Trump's policy temperament, which has relied heavily on the unilateral power IEEPA provides.
The coming Supreme Court decision will not end the US trade war but could force it into a new, more legally contested phase, ensuring continued volatility for global businesses and trading partners.
