Supreme Court to Review Tariff Authority in Expedited Case

The U.S. Supreme Court has agreed to fast-track a case challenging the legality of the Trump administration’s global reciprocal tariffs, with arguments scheduled for November and a ruling expected by year-end.

The case centers on the administration’s reliance on the International Emergency Economic Powers Act (IEEPA)—a 1977 law typically invoked for national security—to impose baseline reciprocal tariffs of 10% on most imports, higher rates on countries without U.S. trade agreements, and additional tariffs on Canada, China, and Mexico. Lower courts have ruled that IEEPA does not authorize such broad tariff powers.

Multiple challenges have been consolidated, including suits by a wine importer, an educational toy company, and other small businesses that cite severe financial strain from higher costs and supply disruptions.

The tariffs remain in place during the appeal. Treasury Secretary Scott Bessent has warned that striking them down could force the U.S. to unwind existing trade agreements and refund between $750 billion and $1 trillion in duties and tariffs – an outcome the administration says could be catastrophic. Economists, however, note that rolling back tariffs could boost growth by reducing uncertainty for investment.

This is the first major Supreme Court case testing the legality of a Trump second-term policy, with potential to redefine the scope of presidential authority over trade. The Court also agreed to hear a related challenge brought by another business group.

Potential Implications for Businesses

A ruling against the tariffs may lead to:

• Refund claims for previously paid duties
• Reassessment of sourcing, pricing, and cost-of-goods calculations
• Shifts in trade compliance and planning strategies, which could have wide-ranging ramifications on global trade

Even if the Supreme Court deems that the Trump administration overstepped their powers in enacted reciprocal tariffs, the administration still has a plan B, to use Section 232 of the Trade Expansion Act of 1962 that entitles the President to impose tariffs or quotas on imports that threaten national security.

Although the final chapter in the tariff saga has not yet been written, at LMC, we will continue to closely monitor developments and deliver clear, timely insights to help our clients make informed decisions in this shifting environment.