WASHINGTON – The U.S. Supreme Court is facing one of the most significant trade decisions in decades: whether the broad tariffs imposed by former President Donald Trump are legal. A ruling against this policy could force the U.S. government to undertake an unprecedented task of refunding tens or even hundreds of billions of dollars to businesses, triggering wide-ranging economic and legal ripple effects.

The Complex Legal Context of U.S. Tariffs

Former President Trump’s “America First” trade policy led to the imposition of multiple layers of tariffs on imported goods from around the world, particularly from China. These measures were implemented under various legal authorities, each sparking its own controversies.

Section 232 Tariffs and the National Security Argument

In March 2018, the Trump administration imposed a 25% tariff on steel and a 10% tariff on aluminum from most countries, citing Section 232 of the Trade Expansion Act of 1962. The main argument was that large-scale imports of these metals threatened to weaken domestic industries, thereby endangering national security. However, the measure faced strong opposition from trade partners and domestic businesses, who called it a disguised form of protectionism. Multiple lawsuits challenged the legality of Section 232 tariffs, but in March 2023, the Supreme Court declined to hear a key case, leaving lower court rulings in favor of the tariffs intact.

Section 301 Tariffs Targeting China

Another widely used trade tool is Section 301 of the Trade Act of 1974, which allows the U.S. Trade Representative (USTR) to investigate and respond to unfair foreign trade practices. The Trump administration cited Section 301 to impose tariffs on hundreds of billions of dollars of Chinese goods, accusing Beijing of intellectual property violations and forced technology transfers. The U.S.-China trade war escalated with multiple rounds of tariffs and retaliations, affecting global supply chains. Legal challenges to Section 301 tariffs are ongoing, with recent federal appellate rulings supporting the legality of some tariff lists, though the possibility of Supreme Court appeals remains open.

The Biggest Controversy: International Emergency Economic Powers Act (IEEPA)

The most contentious issue currently before the Supreme Court is Trump’s use of the International Emergency Economic Powers Act (IEEPA) of 1977 to impose broad tariffs. Lower courts ruled that invoking this law—originally designed to address national emergencies such as economic sanctions—to levy tariffs exceeded presidential authority. During the November 5, 2025 hearing, several Supreme Court justices, including conservatives, expressed serious doubts about the legal basis for this action. Chief Justice John Roberts noted that imposing tariffs “essentially amounts to taxing the American people, which is a core power of Congress.”

The “Nightmare” Scenario: Refunding Billions in U.S. Tariffs

If the Supreme Court upholds lower court rulings and declares IEEPA-based tariffs illegal, the U.S. government would face a complex logistical and financial scenario.

Potential Refund Scale

Experts estimate that tariffs collected under IEEPA could reach nearly $90 billion or more. Some reports cite even higher figures, with Treasury Secretary Scott Bessent mentioning the possibility of refunds up to $750 billion if all tariffs are deemed illegal. According to Bloomberg Economics, IEEPA tariff revenues alone are expected to exceed $140 billion in 2025. Refunding such a massive amount would be a major shock to the federal budget.

An Unprecedented Challenge in the Refund Process

Handling refunds for thousands of businesses could become “a mess,” warned Judge Amy Coney Barrett. The process is expected to be extremely complex and time-consuming. Legal experts say that while companies that filed lawsuits might receive automatic refunds, other businesses would need to submit separate administrative claims, a process full of bureaucratic hurdles.

Matt Lapin, an international trade lawyer, noted that even with an established process, the sheer volume of claims could cause significant delays. History shows that similar refund processes, even on a smaller scale, can take one to two years to complete.

Who Will Benefit from Refunds?

While eliminating tariffs could benefit the broader economy, the direct impact of refunds will not be evenly distributed.

Businesses, Not Consumers, Are the Main Beneficiaries

Experts agree that refund money will go to importers—companies that directly paid tariffs to U.S. Customs and Border Protection. Consumers, despite paying higher prices due to tariffs, are unlikely to receive any refunds. Ernie Tedeschi, a senior fellow at Yale’s Budget Lab, emphasized: “What consumers need to know is that these refunds will go to businesses, not consumers.”

Risks for Small Businesses

A major concern is that the complex refund process could disadvantage small businesses. Jennifer Hillman, a professor at Georgetown Law Center, warned that the government could intentionally make the process “ugly,” for example, by rejecting initial claims and forcing businesses to sue—a route many small firms lack the resources to pursue. Large companies with robust legal teams would have an advantage navigating these complicated procedures, while smaller companies could be left behind.

Economic Impact and the Future of U.S. Tariff Policy

The Supreme Court’s ruling will have effects beyond refunds, reshaping U.S. trade policy and the economic landscape for years to come.

Impact on Trade Policy

A ruling against the administration would be a major blow to presidential authority in international trade. However, experts note this does not mean tariff policy will end. The government could turn to other legal tools such as Section 232 or Section 301 to maintain or impose new tariffs, though these processes are usually more complex and time-consuming than IEEPA.

Meanwhile, the U.S. economy has demonstrated surprising resilience to high tariffs. Growth has continued, and companies have sought to reduce costs by shifting supply chains to countries like Vietnam and Mexico. Nonetheless, the impact of tariffs remains, with former President Trump acknowledging that domestic citizens bear part of the burden of this policy.

Market Reaction and Future Outlook

Stock markets have responded positively to signs that the Supreme Court may overturn the tariffs, hoping that import costs will decline and inflation will ease. However, uncertainty remains. Even if IEEPA tariffs are repealed, the legal battle is not over, and the administration may find other ways to pursue its trade agenda. The upcoming Supreme Court ruling will be a key chapter in the story of U.S. tariff policy, but likely not the final one.