The Supreme Court’s decision to reverse much of President Donald Trump’s tariff policies raised concerns about how he will handle domestic budgets and international deals.
Tariffs were expected to raise $2.5 trillion over the next decade. The loss of the portion of the tariffs that the court found were illegal leaves a gaping hole in Trump’s spending priorities and deficit reduction.
Trump has also argued that the tariffs gave him enormous leverage to negotiate with foreign leaders and companies over trade, immigration, drug enforcement and military conflicts.
“WE ARE CLOSED!” if the Supreme Court strikes down the tariffs, Trump said on social media on January 12.
Trump had warned in a social media post before the Supreme Court argument in November that the country would face an “economic disaster” unless tariffs remained in place, calling the case a matter of “LIFE OR DEATH.”
Here are four issues to watch in the wake of the Supreme Court ruling.
Trump could impose tariffs under various laws
Treasury Secretary Scott Bessent had said the government could impose tariffs under other laws if the Supreme Court struck down tariffs under the 1977 International Emergency Economic Powers Act.
But Trump has argued that he cannot impose or wield any of the other options as easily as a threat.
The administration has expanded tariffs on steel and aluminum and imposed tariffs on automobiles and parts under Section 232 of the Trade Expansion Act of 1962. This law authorizes the President to impose tariffs if the Secretary of the Commerce Department determines that a product is “being imported into the United States in such quantities or under such conditions as to threaten to impair the national security.”
Bessent has said tariffs could also be imposed to address unfair trade practices under two sections of the Trade Act 1974. One section, among other things, allows tariffs of up to 15% for 150 days if a country has a large trade surplus. Another section addresses “practices of a foreign country that are unreasonable or discriminatory and burden or restrict U.S. commerce.”
The administration has already held hearings on whether China’s policies on semiconductors warrant tariffs. Trump has ordered the U.S. Trade Representative to investigate whether taxes on digital services imposed by Austria, Canada, France, Italy, Spain, Turkey and the United Kingdom justify tariffs.
Refunds “can take more than a year,” Bessent says
Even before the Supreme Court’s ruling, thousands of importers, including Costco, Revlon and Goodyear, filed lawsuits in the U.S. Court of International Trade seeking reimbursement for an estimated $150 billion they paid in tariffs.
But Trump administration officials said the companies would receive refunds without the need for a lawsuit if the Supreme Court ruled the tariffs were collected illegally.
The Committee for a Responsible Federal Budget estimated in October that roughly $90 billion of the $195 billion collected in tariffs during Trump’s first year in office could be refunded, based on Customs and Border Protection figures. According to statements from the Ministry of Finance, the government collects more than $30 billion in customs duties every month.
Bessent told Reuters on January 9 that the government has enough money to repay the tariffs, but that repayments would be spread over weeks or even a year. The Treasury had nearly $774 billion in cash on January 8.
“We’re not talking about the money all going away in one day,” Bessent said. “Probably in weeks, months, maybe a year, right?”
The Supreme Court’s decision could cost the federal budget trillions
The tariffs were expected to provide a significant boost to Trump’s spending priorities and deficit reduction.
The nonpartisan Congressional Budget Office (CBO) predicted in November that total tariffs would raise $2.5 trillion over the next decade. By reducing the need for more borrowing, the rates are also expected to reduce interest payments on the national debt by $500 billion.
Trump’s emergency tariffs accounted for a significant portion of that revenue. Lawmakers use the CBO as part of their calculations on how much to spend each year. A reduction in rates means that there is less income available to spend.
“With today’s Supreme Court ruling confirming the illegality of President Trump’s emergency tariffs, the country will now be about $2 trillion deeper in the hole,” said Maya MacGuineas, president of the advocacy group Committee for a Responsible Federal Budget. “We are in a bleak budget situation, and it has only gotten worse.”
The rates of the fares affected by the Supreme Court ruling fluctuated throughout the year. But the Committee for a Responsible Federal Budget, an advocacy group, estimated in October that $90 billion of the total tariffs collected during Trump’s first year in office could be refunded, based on Customs and Border Protection figures.
The average American family has paid nearly $1,700 in tariff costs since Trump took office, according to Democrats on Congress’ Joint Economic Committee. Americans paid an estimated $231 billion in tariffs between February 2025 and January 2026, according to the commission.
“President Trump’s tariffs have been a disaster for American families, raising costs at the worst possible time,” Senator Maggie Hassan of New Hampshire, the top Democrat on the committee, said in a statement on February 20. “While the Supreme Court gratefully and correctly ruled that much of Trump’s tariff agenda was an illegal exercise of presidential power, today’s ruling cannot undo the damage the tariffs have already caused.”
How will other countries that have condemned the tariffs respond?
Foreign leaders reacted cautiously to the decision because the Trump administration could impose tariffs in ways other than declaring emergencies. One statute would authorize tariffs on imports that threaten national security, and another statute would authorize retaliatory tariffs against countries that send more goods to the United States than they import.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, said the decision was a legal ruling and not a reset of U.S. trade policy.
“Canada must prepare for new, blunter mechanisms that could be used to renew trade pressure, potentially with broader and more disruptive effects,” Laing said in a statement.
William Bain, head of trade policy at the British Chambers of Commerce, said different legislation was used to impose US tariffs on steel and aluminum.
“While this decision provides clarity on the President’s executive powers to raise tariffs, it does little to clear the murky waters for the business community,” Bain said in a statement.
Leaders of other countries condemned the tariffs when Trump announced them before negotiating new trade deals to blunt the impact of the additional duties. Chinese tariffs severely limited imports of agricultural products such as U.S. soybeans before a ceasefire was reached. Trump announced $12 billion in agricultural aid. Canada continues to negotiate.
Trump warned in a Jan. 12 social media post of “payback” from countries and companies that would give up trillions of U.S. investments in factories and equipment without the threat of tariffs.
This article originally appeared on USA TODAY: 4 issues to watch after Supreme Court ruling overturns Trump tariffs
Reporting by Bart Jansen, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
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