The air inside the Supreme Court building on November 5, 2024, felt heavy, not just because of the architecture, but because of the trillions of dollars at stake. You’ve likely heard the headlines about "trade wars" and "economic protectionism," but the current legal battle is far more granular and, frankly, a bit more chaotic than a simple political debate.
We are currently in mid-January 2026, and the business world is holding its breath. Every Friday and Wednesday morning, traders and supply chain managers refresh the SCOTUS opinion page like they're waiting for concert tickets. They're all asking the same thing: will the supreme court side with trump on tariffs or will they pull the rug out from under the executive branch?
Honestly, if you look at the oral arguments and the lower court history, the answer isn't looking great for the White House.
The 1977 Law That Started It All
To understand this mess, we have to talk about the International Emergency Economic Powers Act (IEEPA). It’s a 1977 statute that was basically designed to let the President freeze assets of foreign enemies during a crisis. Think of it as a financial "emergency brake."
But in early 2025, President Trump didn't just use it to freeze bank accounts. He used it to slap "reciprocal tariffs" on almost every country we trade with. He also created "trafficking tariffs" aimed at China, Mexico, and Canada, citing the fentanyl crisis as a national emergency.
Lower courts—specifically the U.S. Court of International Trade and the Federal Circuit—weren't buying it. They essentially said, "Hey, IEEPA lets you regulate transactions, but it doesn't give you a blank check to tax the entire world." They ruled the tariffs illegal. Now, it's up to the nine justices in D.C. to decide if those lower courts were right.
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Why the Justices Are Skeptical
During the November arguments, things got a little spicy. It wasn't just the liberal justices pushing back; the conservative wing of the court seemed deeply worried about how much power this would give any future president.
- Justice Amy Coney Barrett was notably focused on the "mess" of it all. She asked pointed questions about what happens if the court strikes the tariffs down. Do businesses get their money back? That’s $200 billion and counting.
- The "Major Questions" Problem: This is a big legal theory right now. The court basically says that if an agency (or a President) wants to do something with massive economic impact, they need a very clear "okay" from Congress.
- The Separation of Powers: Article I of the Constitution says Congress has the power to tax. If Trump can use an emergency law to tax everything, does Congress even matter in trade anymore?
The "Plan B" That Business Owners Need to Know
If you're a business owner, you shouldn't assume the tariffs are just going to vanish into thin air even if the court rules against the administration. The White House isn't exactly known for rolling over.
Kevin Hassett, the National Economic Council Director, has already hinted that they have "Plan B" options. If IEEPA is struck down, the administration could pivot to Section 232 of the Trade Expansion Act of 1962. This law allows tariffs for "national security" reasons. It's a narrower path, but it's one they’ve used before for steel and aluminum.
The difference? Section 232 requires investigations by the Commerce Department. It’s slower. It’s clunkier. But it’s much harder to challenge in court.
The Refund Nightmare
This is where it gets really complicated. If the Supreme Court says, "No, these IEEPA tariffs were illegal from day one," a lot of companies are going to want their money back. We're talking about a logistical disaster.
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Customs and Border Protection (CBP) would have to process thousands of claims. Some experts think it could take over a year to get that cash back into the hands of importers. There’s also the question of whether the court will make the ruling "prospective" (meaning it only stops future tariffs) or "retroactive" (meaning they owe everyone a refund).
Neal Katyal, representing several small businesses, suggested a prospective-only ruling to avoid a total economic meltdown. But for a small business that’s been hemorrhaging cash since April 2025, that sounds like a raw deal.
What Most People Get Wrong About This Case
Most people think this is just a Republican vs. Democrat thing. It’s not. In the lower courts, 12 states sued to stop these tariffs, and they weren't all "blue" states. Businesses of all stripes are struggling with the uncertainty.
The real issue is the definition of an emergency.
Trump’s legal team argued that a trade deficit is an "unusual and extraordinary threat" to the economy. The challengers argue that trade deficits are a normal part of global economics and shouldn't trigger emergency dictator-like powers over trade.
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If the Supreme Court sides with Trump, they are essentially saying that any president can declare a "national emergency" for almost any economic reason and bypass Congress to raise taxes. That’s a massive shift in how the U.S. government functions.
Reality Check: What Happens Next?
We are likely looking at a ruling any day now—likely before the end of January 2026. Prediction markets like Kalshi have shown a significant drop in confidence that the court will side with the administration. At one point, traders gave it a 46% chance; now, it’s hovering around 32%.
So, what should you actually do?
If you're an importer or a business heavily reliant on global supply chains, don't just wait for the news.
- Check your "Liquidations": If you’ve paid IEEPA tariffs, talk to your customs broker about "protesting" those entries. If you don't protest them within 180 days of liquidation, you might lose your right to a refund even if the Supreme Court rules in your favor.
- Audit your HTS codes: The administration has been modifying the Harmonized Tariff Schedule (HTS) constantly. Make sure you aren't overpaying based on a misclassification.
- Prepare for "The Pivot": Even if the IEEPA tariffs die, be ready for Section 232 or Section 301 tariffs to take their place. The administration's goal is protectionism; they'll just find a different tool in the shed.
The Supreme Court is in a tough spot. They want to be "pro-business," but they also want to be "pro-Constitution." Usually, those two things align. Here, they're in a head-on collision. Whether they side with the President or the importers, the landscape of American trade is about to change forever.
Actionable Next Steps:
Immediately contact your trade counsel to file protective protests on all liquidated entries involving IEEPA duties. Monitor the SCOTUS blog every Monday and Wednesday morning for the official opinion release. Simultaneously, begin a supply chain audit to identify alternative sourcing countries that may fall under different, more stable trade agreements like the USMCA, as the "reciprocal tariff" regime remains highly volatile.