Original Title: "The Supreme Court's Tariff Ruling is Imminent, Trump Frequently Warns, Does He Sense a Loss?"
Original Author: Long Yue, Wall Street Journal
The fate of the Trump administration's signature tariff policy hangs in the balance of a key ruling from the U.S. Supreme Court. Despite senior officials in the U.S. government attempting to downplay the potential legal setback, President Trump’s increasingly anxious remarks, combined with widespread predictions from the market and analysts, point to an increasingly clear possibility: the government may lose this lawsuit, and the subsequent remedial measures will be far more complex than officials have portrayed.
This ruling, expected to be announced in January next year, centers on determining whether the government has the authority to impose broadly based "reciprocal tariffs" under the International Emergency Economic Powers Act (IEEPA). Recently, Trump has made heated statements on social media, claiming that "evil, hate-filled forces are fighting us in the Supreme Court," and urging the justices to "do the right thing for America." Such rare expressions have been interpreted by the market as a deep concern over the potential overturning of his policies.
On November 6 of this year, Trump also told reporters that if he loses this lawsuit in the Supreme Court, it would be "devastating for our country." Trump stated that if that were the case, "we would have to come up with a second plan."
In contrast to Trump's anxiety, cabinet members have displayed a "calm and collected" demeanor. Treasury Secretary Mnuchin warned on Tuesday (December 16) that overturning the tariffs would "harm national security," as "economic security is national security." However, he also stated that the government has "many other ways to increase revenue."
The Risk of Losing Approaches: An Anxious President and a "Calm" Cabinet
Currently, the market's confidence in the Trump administration winning the tariff lawsuit is low. According to a report released by Goldman Sachs on December 16, based on the questions posed by justices during the oral arguments in November, the Supreme Court is "likely" to rule that most of the tariffs imposed by the government this year are illegal early next year. This view is also reflected in the general expectations of the prediction markets.
The two core cases currently being reviewed by the Supreme Court are "Learning Resources Inc. v. Trump" and "V.O.S. Selections Inc. v. Trump," which challenge the core issue of whether the president has overstepped constitutional boundaries by using the IEEPA to exercise Congress's exclusive power to tax.
Faced with the looming risk of losing, the public statements within the White House show a clear temperature difference. Trump's rhetoric is filled with urgency, while officials, represented by Secretary Mnuchin, are trying to convey a message to the outside world: even in the worst-case scenario, the government still has backup plans.
While emphasizing national security, Mnuchin also acknowledged the existence of alternative plans, suggesting that the government is preparing for a possible defeat. However, this public display of calm contrasts sharply with his claim in court documents that overturning the tariffs would lead to a "fiscal disaster."
The "Plan B" is Not Easy: Alternative Plans Face Legal Hurdles
Although government officials claim they can easily turn to other trade regulations to rebuild the tariff system, legal experts and analysts point out that this path is fraught with thorns. According to Politico, any alternative plan will face new legal and political obstacles, and the process will be far from smooth.
The two main legal tools the government might resort to both have significant limitations:
Section 122 of the Trade Act of 1974: This provision authorizes the president to impose tariffs of up to 15% to address "serious international balance of payments deficits." This could temporarily replace the current 10% baseline tariff, but the problem is: first, the tariff must be "non-discriminatory," which contradicts the Trump administration's practice of reaching exemption agreements with specific countries; second, its effective period is only 150 days unless extended by Congress, which is nearly impossible in the current political environment.
Section 338 of the Tariff Act of 1930: This provision allows the president to impose tariffs of up to 50% on countries that discriminate against U.S. trade. However, this provision has never been used since its enactment, and its legal issues have not been tested in court. A key dispute is whether the president must first conduct an investigation by the U.S. International Trade Commission (ITC) before taking action. If an investigation is required, it will take a significant amount of time, making it impossible to achieve an immediate replacement of tariffs.
Law professor Timothy Meyer told Politico that although the U.S. Court of International Trade generally shows deference to the executive branch when interpreting tariff laws, every step taken to activate these alternative plans could trigger new lawsuits.
Goldman Sachs Forecast: Tariff Rates May Decline, Long Road to Refunds
For investors, the most direct impact is the change in tariff costs. Goldman Sachs' report predicts that if the IEEPA tariffs are overturned, the risk will "tend toward lower tariff rates."
Analyst Alec Phillips pointed out that even if the government turns to Section 122 as a temporary measure, its 15% tariff cap means that the higher tariffs currently imposed on certain trading partners (such as India, with rates as high as 50%) will have to be reduced. Furthermore, imposing higher tariffs on specific countries under Section 301 would require time-consuming and complex investigations, making it impractical to investigate all trading partners.
Goldman Sachs expects that by the end of 2026, the effective tariff rate in the U.S. will decrease by about 2 percentage points from the current level.
Additionally, a loss would trigger a massive tariff refund issue. Goldman Sachs estimates that the government has collected about $130 billion in tariffs through the IEEPA, and is still adding at a rate of about $20 billion per month. Companies (such as Costco) have filed lawsuits to ensure they receive refunds. However, the refund process could be very lengthy and require subsequent legal actions. According to Politico, the government is hastening to deposit tariff revenues into the U.S. Treasury, a move seen as intended to increase the difficulty for companies to obtain refunds.
Political and Diplomatic Credibility Under Dual Test
A legal defeat would also bring serious political and diplomatic consequences for the Trump administration.
On the diplomatic front, many "trade agreements" reached under the threat of IEEPA tariffs are not legally binding. Once the foundation of the tariffs is shaken, foreign governments may demand renegotiation and withdraw previous concessions, which will test the government's negotiating ability and credibility.
Domestically, the credibility of senior government officials will be undermined. Several officials, including Mnuchin, have claimed in court documents that overturning the tariffs would lead the U.S. into "domestic and international turmoil." If such scenarios do not materialize after a loss, they will face accusations of misleading the court and the public. At the same time, this will put Republican lawmakers in an awkward position ahead of the 2026 midterm elections, as they will have to make a difficult choice between supporting a tariff policy that is extremely unpopular in polls (with about two-thirds of Americans opposing it) and alienating Trump.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
