US President Donald Trump is set to launch a wave of new tariffs based on alternative legislation if the US supreme court rules against his current levies, diplomats and trade lawyers say.
The US supreme court is poised to rule as soon as January on the legality of the president’s use of emergency powers to hammer trading partners with tariffs, leaving the centrepiece of his economic policy hanging in the balance.
Markets traders are braced for turmoil if the US’s top court rules against Mr Trump, potentially leaving the federal government on the hook for billions of dollars in repayments of levies that have already been collected.
But diplomats and trade lawyers believe the administration has a series of plans in place to shore up the levies regardless of the court’s ruling, using a combination of existing trade measures alongside alternative laws.
RM Block
The exact mix of laws the administration could deploy if the use of emergency powers is ruled illegal depends on the detail of the ruling, said one person familiar with the administration’s thinking.
“Nobody thinks the tariffs are going away,” said Ted Murphy, a trade lawyer at Sidley Austin in Washington. “They are just going to be reissued under a different umbrella. They will reissue tariffs the same day.”
Among the moves expected from the administration should the supreme court rule against it is broader use of an obscure national security law known as Section 232 of the Trade Expansion Act of 1962, which has already been activated to apply levies to cars, steel, aluminium, copper and lumber.
Investigations into semiconductors, pharmaceutical goods and medicines, critical minerals and aerospace parts are all under way using section 232, but their conclusions have remained unpublished.
The administration has also relied on section 301 of the 1974 US Trade Act to launch investigations into the trading practices of countries including Brazil, Nicaragua and China, and is likely to unveil more probes.
Trade lawyers say the administration could use a measure known as section 122 of the Trade Act of 1974 that would allow Washington to impose tariffs of up to 15 per cent on trading partners for 150 days.
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A separate provision, section 338 of the Tariff Act of 1930, could also be triggered, although it has been used very rarely in recent history. It allows the government to immediately issue levies of up to 50 per cent on a foreign country that discriminates against US commerce, and can be used to respond to any “unreasonable charge, exaction, regulation, or limitation”.
Both section 338 and section 122 were discussed by the administration in the early months of this year as ways to impose Trump’s reciprocal levies, according to people familiar with those talks.
But while the White House may be able to rebuild a tariff wall, the alternative legal avenues will curtail Trump’s ability to quickly raise and lower levies, depriving him of the most immediate route to hitting big trading partners with duties.
“If the supreme court rules against the administration, Mr Trump’s power to use tariffs both as punishment and reward will be significantly diminished,” said Lori Wallach, director of the Rethink Trade group and a lawyer.
“With other laws, the administration would have to make a case for using tariffs,” she said. “It will be less like: ‘I have woken up and decided I am annoyed with this Canadian TV advert so I am going to increase the tariff rate.’”
Mr Trump has described the supreme court’s deliberation as “one of the most important cases in the history of our country”, and earlier this week urged his followers to pray for a court victory for the administration.
“Everybody should pray that the United States Supreme Court has the Wisdom and Genius to allow Tariffs to GUARD our National Security, and our Financial Freedom!” Mr Trump wrote on Truth Social.
The administration has collected $200 billion (€170 billion) in tariff revenue in 2025, according to government figures.
Importers are scrambling to understand how to potentially claim refunds for what they paid in levies resulting from Trump’s use of emergency powers, with many hiring lawyers and preparing to appeal to courts.
Earlier this month, retail giant Costco sued the administration in a bid to preserve its right to reclaim the tariffs it had paid. About 40 other legal briefs have been filed in the supreme court case in opposition to Trump’s signature tariffs, including from the US Chamber of Commerce, the nation’s largest business association.
Any ruling against the use of emergency powers is likely to rattle the government bond market, with prices falling and yields rising on the expectation of a jump in government borrowing.
Without tariff revenue, the Treasury department would be faced with a yawning fiscal deficit and a faster pace of borrowing to fill the gap, lowering the price of existing debt.
Striking the use of emergency powers would also likely result in short-term confusion for companies and trading partners.
Even if repayments were ultimately delayed or capped, the legal overhang could complicate corporate earnings forecasts and disrupt cash flows for companies that had absorbed or passed on the higher costs.
White House spokesperson Kush Desai has warned that “the economic and national security consequences” of a supreme court ruling against Mr Trump’s tariffs would be “enormous”.
“The White House looks forward to the supreme court’s speedy and proper resolution of this matter,” Mr Desai said. – Copyright The Financial Times Limited 2025
