Supreme Court ruling on tariffs leaves companies facing new unknowns

WASHINGTON (TNND) — The Supreme Court’s ruling striking down many of President Donald Trump’s signature tariffs has thrown trade policy back into flux as companies and trading partners figure out what comes next.

Tariffs have been a cornerstone of Trump’s economic agenda that he says are making the country rich and restoring U.S. manufacturing. He had been vocal for weeks as justices deliberated their decision, describing the case as one of the most important in the country’s history and a ruling against the policy would be a blow to the economy.

The Supreme Court overturned many of Trump’s most expansive tariffs in a ruling that said the International Emergency Economic Powers Act did not give him the authority to implement the import taxes. IEEPA gives presidents the ability to regulate imports during emergencies, and had mostly been used in the past to impose sanctions until Trump invoked it for tariffs.

That decision has lowered the effective tariff rate at least temporarily but injected a new round fresh volatility for companies and trading partners to navigate. The Yale Budget Lab estimates the effective tariff rate is now at 13.7%, compared to 16% before the ruling, though it’s unclear where it may ultimately settle as the administration seeks to rebuild the tariff policies that were struck down.

Companies are now facing an avalanche of unknowns as the administration tries to replace the sweeping tariffs businesses had spent the last year adapting to. Things had somewhat settled after a series of trade agreements with Europe, India and others and a slowdown in the rate of new import taxes after months of constant change in trade policy.

“Companies start making plans to deal with the uncertainty. Stuff gets priced into stocks, so it was kind of getting to a little bit of a stable point. We knew that there was inventories out there and that certain things were going to go up, now it just kind of roils things again,” said Joe LiPuma, clinical associate professor at Boston University’s Questrom School of Business.

Countries that agreed to higher tariff rates may seek to renegotiate trade deals, more lawsuits could be filed, and companies are facing a potentially lengthy process to getting refunds from levies already paid.

Some businesses may respond by holding off on investment and hiring until trade policy is more settled, creating a potential risk for the U.S. economy that has continued to chug along through inflation woes and erratic tariff implementations. Others could see high tariffs as a given and move forward with plans to raise prices to make up for losses from higher inputs.

“The big thing with these is where in the supply chain these different costs are being eaten. How much of this has been passed along? How much have aspects of the supply chain dealt with absorbing some of it from the manufacturers to the various parts and components along the way,” LiPuma said. “It’s not just a tariff itself; it’s a knock-on effect on the whole supply chain and inventories and feeling like you’re going to be able to deal with the next upset.”

The battle over tariffs is just getting started again as the administration tries to rebuild the tariff regime that had been put in place over the last year.

Within hours of the ruling, Trump responded to the decision with a new global 10% tariff under a different authority, Section 122 of the Trade Act of 1974, that was later upped to 15%. Administration officials have also floated using another provision of the law, Section 301, to implement more levies.

Section 122 allows tariffs of up to 15% for 150 days. After that, the tariffs would need approval by Congress to be extended — a dicey proposition with the midterms nearing and polls showing voters opposed to tariffs. Republicans have also been divided on whether to back Trump’s tariffs and may be hesitant to back them amid voter frustrations about affordability.

The administration is looking into other authorities to reimpose many of the tariffs that were wiped away in the Supreme Court’s decision.

Investigations are being launched on other industries under Section 232 of the Trade Expansion Act of 1962, which allows for tariffs to be imposed on national security ground after a government report. Trump has already used the statute to put tariffs on a wide range of products like steel, drugs, copper and lumber products like furniture and kitchen cabinets.

“We had to look at backup plans, and we found ways to really reconstruct what we’re doing,” U.S. trade representative Jamieson Greer said on ABC’s “This Week.” “Now it doesn’t have the same flexibility that the president had under the previous authority that he was using, but it gives us very durable tools.”

Trump said he had plenty of other options at his disposal despite the ruling.

“The court has also approved all other Tariffs, of which there are many, and they can all be used in a much more powerful and obnoxious way, with legal certainty, than the Tariffs as initially used,” he wrote.