Supreme Court Strikedown on Trump Tariffs Would Be Positive, Say SC Execs
Nearly 70% of supply chain leaders say that they would view a Supreme Court reversal of tariffs imposed this year by President Donald Trump's administration as a net positive. As cost pressures on businesses mount, it's clear that, whatever the eventual ruling ends up being, the resulting fallout could shape U.S. economic policy for decades to come.
According to a survey of 250 industry leaders across manufacturing, retail and distribution from consultancy firm West Monroe, 68% say removing tariffs would benefit their supply chains, citing stronger sales, fewer constant adjustments, greater planning stability and reduced administrative burden. Just 15% expect a negative impact, pointing to wasted diversification efforts and added complexity from unwinding changes. Some 58% expect to see their sales or revenues increase if the Supreme Court strikes down Trump's tariffs. More than half also said that they would have to make fewer sudden supply chain adjustments in the event of a reversal, 45% said that they would have more financial stability, and 44% predicted a lighter administrative burden.
The Supreme Court is scheduled to hear a legal challenge to the tariffs on November 5, following a late-May ruling from the U.S. Court of International Trade, which asserted that the president had overstepped his executive authority by declaring emergencies over trade deficits and drug trafficking to unilaterally impose tariffs. While Trump has claimed that striking down his tariffs "would literally destroy the United States of America," others have stressed a need to limit the president's power over international trade.
Read More: Legal Challenge to Trump Tariffs Leaves Supply Chains in Limbo
The legal challenge to Trump's tariffs revolves around the president's use of the International Emergency Economic Powers Act (IEEPA), which gives the executive the power to regulate trade in response to a national emergency. However, IEEPA had never been used to enact tariffs until now, and was originally crafted in 1977 as a way to limit the president's emergency powers, rather than expand them.
From an economic perspective, the Supreme Court now faces what Royal United Services Institute think tank policy fellow Samarth Gupta calls a "tariff trolley problem," referring to the classic thought experiment in ethics that presents a choice between two unavoidable evils caused by a runaway trolley.
"The Supreme Court must either pull the lever to change course to a path fraught with short-term uncertainty... or, if it does nothing, confirm the ability of America's presidents to usurp Congress and gain unilateral power to impose international taxes and tariffs," Gupta said in a September 24 commentary.
Should justices "pull the lever," such a decision would invalidate an estimated 71% of tariffs issued by the Trump administration this year, dropping the average effective tariff rate in the U.S. from 17.4% to 6.8%. Treasury Secretary Scott Bessent claimed in early September that, although long-term GDP would grow by an estimated $95 billion annually, the treasury would be forced to return tens of billions of dollars in collected revenue.
If the Supreme Court allows the tariffs to remain in place, it could prove challenging to untangle the levies down the line, Gupta warned, given that companies are likely to make expensive, long-term investments in offshoring and diversification. In the minority of respondents to West Monroe's survey that see a tariff strikedown as potentially negative, 61% pointed to increased operational complexity from having to unwind changes to supply chains, while 29% said that they've already adapted their business models to account for tariffs.
"(Trump's) left the Supreme Court in an unenviable position: Face the fallout of potential short-term economic chaos, or cement a long-term restructuring of America's economic policy," Gupta said. "Like any trolley problem, neither choice is good."
"This is one of the most consequential executive-power cases in years," said Cato Institute legal fellow Brent Skroup in an October 6 commentary. "If they uphold these tariffs, they will further entrench a presidency able to rewrite tariff schedules -- and perhaps much more -- without Congress."