Economics
January 8, 2026
Court Brief
Supreme Court IEEPA Tariff Case Preview
Special Commentary
Economist(s)
Summary
A potential Supreme Court ruling as early as Friday could strike down a core pillar of Trump’s tariff policy.
The Core Legal Question:
At issue in two related cases before the court is whether the President can use a 1977 “emergency” law, the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. The cases are similar but slightly different. We claim no legal expertise, but some basic context is helpful here especially in the result of a split verdict: In one case (Learning Resources, Inc. v. Trump), the question is whether IEEPA even authorizes tariffs and if that delegation of power is constitutional in the first place. The other case (Trump v. V.O.S. Selections) essentially accepts the IEEPA but contends that “regulating” imports is not the same thing as “taxing” them. Their contention is that only Congress has the power to tax.
The decision could come around 10am Friday (1/9). We expect there is a greater likelihood the court rules against this set of tariffs, and we unpack a few key points to be aware of ahead of the potential decision below.
Our primary takeaway is even if the court rules in favor of the importers who brought the challenges, uncertainty about the timing and mechanics of refund distributions, not to mention the eventual implementation of new tariffs through different channels, suggests to us that a ruling striking down the tariffs is not apt to bring lasting relief to the importers who brought the suit in the first place.
Supreme Court IEEPA Decision Friday likely, but NOT guaranteed
We expect a decision on IEEPA tariffs Friday around 10am given how the court has expedited the case so far, but one is not guaranteed. Why?
SCOTUS announced Friday (1/9) as a non-argument day, meaning the court will meet for a session in the Courtroom at 10am where they announce opinions, or decisions on cases. The court does not, however, announce which rulings will be released ahead of time.
If it does not render a decision on IEEPA on Friday, the next potential timeline for a decision would be early next week 1/12-1/14, which are designated as argument days and also may begin with the announcement of opinions.
How Will the Court Rule?
It's unclear, though many of the justices expressed general skepticism around IEEPA granting the President broad authority to impose tariffs during the opening arguments of the case back in November.
Prediction markets Polymart and Kalshi continue to overwhelming favor SCOTUS striking down IEEPA tariffs, placing about a 70% chance the court rules against them.
Will a Strike Down of Tariffs Require Refunds?
Likely but not guaranteed. The court should clarify if the decision applies retroactively to previous payments made or prospectively on a go-forward basis only when announcing a decision. Both are possible.
It’s also entirely possible that the court kicks the decision on refunds to the lower courts to decide. But even if the court decides Friday that refunds must be made nationwide, it may require individual importers/businesses to file a case to get the refund, lengthening the process.
The bottom line is that refunds will take time to pass through the system; Friday may not bring an exact timeline.
How Big Would Refunds Be?
If processed in full, somewhere around $130 billion in funds would gradually make their way back into the private sector. This covers just over half of the tariff revenue generated over the past year, or about 3% of the total federal revenue generated in calendar year 2025, and would result in a correspondingly larger deficit in 2026 than our current forecast.
How Can Trump Reimpose Tariffs?
President Trump can act quickly using Section 122 (Trade Act of 1974), which allows the President to impose 15% tariffs on all countries for 150 days to address balance-of-payment issues. Section 338 (Tariff Act of 1930) is another option, which allows the President to impose tariffs up to 50% on select countries found discriminating against U.S. commerce, though this could take around 30 days to kick-in.
Trump could instead tap Section 232 (Trade Expansion Act of 1962) or Section 301 (Trade Act of 1974), both of which require investigations by the Commerce Department and U.S. Trade Representatives respectively, further delaying implementation for months. Why would the administration go this route? It could seek to delay implementation until after the midterm elections, alleviating some affordability concerns, and/or it may view these sections as having more legal basis given they are behind existing product-level and some China-specific tariffs.
For additional detail on legislative options, see Port Authority: Answering Questions on the Upcoming Supreme Court Tariff Ruling.