What Happens If the Supreme Court Strikes Down Trump’s Trade Authority?

The U.S. Supreme Court is reviewing a case that could significantly reshape presidential authority over trade. At the center of the dispute is whether President Trump exceeded his legal powers under the International Emergency Economic Powers Act (IEEPA) by imposing sweeping tariffs on imports without a declared national emergency.

What’s Under Review?

The tariffs in question began with levies on China, Mexico, and Canada, and were later expanded to most global imports during the administration’s “Liberation Day” rollout in April 2025. While some parts of the rollout were delayed after an initial market reaction, the full measures eventually took effect in August.

Lower courts found that IEEPA may not authorize such broad tariffs, prompting the case to reach the Supreme Court. Justices heard arguments in November 2025, and several expressed skepticism about the administration’s interpretation of the law.

A decision is still pending and a decision is expected no later than June, when the Court’s term ends.

Potential Impact on Businesses

If the Court rules against the administration:

• Over $170 billion in tariffs could be impacted
• More than 1,000 companies have filed lawsuits seeking refunds
• Refunds may not be retroactive — the Court could decide the ruling applies only going forward

Trump’s Potential Backup Plan: A 10% Tariff

White House officials have confirmed that if the current tariffs are struck down, the administration plans to move swiftly with a replacement strategy:

• A 10% across-the-board tariff on all imports under Section 122 of the Trade Act of 1974
• Section 122 allows the president to impose tariffs of up to 15% for up to 150 days to correct trade imbalances
• Longer-term tariffs could follow under other authorities

This stopgap measure would allow the administration to reassert tariff coverage quickly while developing more permanent alternatives.

Other Legal Tools Being Considered

Beyond Section 122, the administration may rely on other trade mechanisms, including:

• Section 232 – Tariffs for national security purposes (e.g., for steel and autos)
• Section 301 – Tariffs in response to unfair trade practices
• Section 201 – Temporary tariffs to protect U.S. industries
• Section 338 – Tariffs on countries that discriminate against U.S. commerce
• IEEPA Licensing Model – Trump has suggested using import licenses in place of tariffs, a legally untested strategy

Planning Considerations for Businesses

Companies should be proactive in monitoring developments and preparing contingency plans. If the ruling comes back against the Trump administration, it is going to be messy for companies to get refunded the tariff’s they already paid. Consensus is that the administration will not make it easy for entities to get refunds.

How LMC Can Help

LMC is closely monitoring this case and the potential implications for businesses. As the situation evolves, we aim to keep clients informed and supported through timely insights and strategic perspective.

If you have questions or would like to discuss how these developments could impact your business, please reach out to your LMC advisor.