What the Supreme Court’s tariff ruling means for your money

The Supreme Court could decide the fate of President Donald Trump’s tariff policies as early as Friday, and economists say the decision will impact consumers’ wallets.

Economists say a high court ruling that certain tariffs are unconstitutional could provide economic relief to consumers who have borne at least some of the cost of import duties through higher prices.

The tariffs in question were imposed under the International Emergency Economic Powers Act of 1977.

The Trump administration used IEEPA as a legal tool to impose tariffs on a wide range of trading partners, raising tariffs on imported goods to the highest levels since the early 20th century. No president has ever used the law to impose tariffs.

Customs duty is a tax levied on imported goods. Economists say these taxes are primarily paid by the U.S. corporations that import the items, rather than foreign exporters.

The average effective tariff rate in the United States is currently 16.9%, the highest since 1932, said John Rico, associate director of policy analysis at the Yale Institute for Budget Studies.

A paper published last week by New York Fed researchers said that U.S. businesses and consumers will bear “the majority” of the economic burden of tariffs imposed in 2025, or about 90%. White House officials disputed the findings.

According to economists and various economic analyses, businesses generally pass on at least some of their costs to consumers.

Tariffs are making everything from furniture and clothing to food, electronics and cars more expensive, according to the Yale Budget Institute.

According to a study by the Tax Foundation, President Trump’s tariffs will cost each American household $1,000 in 2025 and $1,300 in 2026.

The Yale Budget Institute has come to a similar conclusion, and based on current tariff rates, the average consumer will pay an additional $1,300 to $1,700 in 2026 compared to what they paid before 2025, Rico said.

If the court strikes down the IEEPA tariff as unconstitutional, the burden would be cut by about half to between $600 and $800 in 2026, Rico said.

A majority of the Supreme Court justices expressed skepticism about the legality of IEEPA tariffs during oral arguments in November.

Without these tariffs, the effective tariff rate would drop to about 9%, much higher than the about 2% it was at before President Trump began his second term, Rico said.

Economists say the Trump administration relies on a variety of authorities to impose tariffs on stronger legal grounds, so the burden on consumers will not go away.

The Trump administration has said that if the Supreme Court invalidates IEEPA tariffs, it will use these channels to impose new tariffs to get “to the same place.”

“Even assuming that the IEEPA was ruled to be used unconstitutionally, the situation would not change much,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics and a former Treasury official who specializes in international trade. “The President will use other statutes for virtually the same tariffs.”

The Tax Policy Center estimates that if the Supreme Court rules against the IEEPA tariffs and they are not replaced, households would pay $1.4 trillion less in taxes over 10 years, saving the average household $1,200 in 2026.

President Trump invoked emergency powers under the IEEPA to impose a wide range of tariffs.

U.S. Customs and Border Protection collected about $133.5 billion in customs revenue under IEEPA from fiscal years 2025 and 2026 through Dec. 14, according to a Cato Institute analysis of federal data. This corresponds to approximately 60% of the total customs revenue collected during that period.

President Trump used IEEPA to impose 10% basic tariffs on all U.S. trading partners on the so-called Emancipation Day in April 2025, and even higher “reciprocal” tariffs on dozens of countries to narrow the trade deficit.

Since his inauguration, he has also invoked IEEPA to impose tariffs on the United States’ largest trading partners, Canada, China and Mexico, for failing to stop fentanyl trafficking.

Since the start of his second term, he has also suspended the “de minimis” rule, which waives tariffs on imports worth less than $800, and invoked legislation that would tax countries such as India on imports of Russian crude oil and Brazil on former President Bolsonaro’s indictment, according to a Congressional Research Service analysis in January.

But there are several other laws the Trump administration relies on to impose tariffs that could be leveraged more powerfully if the Supreme Court strikes down the IEEPA tariffs, Hufbauer of the Peterson Institute said.

That would “take away some of the peace of mind” for consumers, he said.

Hufbauer said one of the “easiest” existing authorities is Section 232 of the Trade Expansion Act of 1962.

In fact, President Trump has already used Section 232 to impose tariffs on a wide range of items, including steel, aluminum, automobiles and auto parts, copper, trucks, and wood products.

“We believe the White House could use a number of other statutes to rewrite many of its existing tariffs…within days if IEEPA is repealed,” according to a January research note from Chris Krueger, a strategist at TD Cowen’s Washington Research Group.

It is unclear how much refunds businesses and consumers will receive after the Supreme Court’s ruling.

Mark Zandi, chief economist at Moody’s, said he believes there is a “better than even chance” that if the Supreme Court strikes down the IEEPA tariffs, affected companies will receive some form of compensation from the federal government.

“If the Supreme Court remains silent on this issue and the government does not provide compensation, significant legal action by the companies is likely, and ultimately the courts will have to decide,” he said in an email.

President Trump also floated the idea of ​​sending $2,000 tariff “dividend” checks to Americans from the proceeds.

But the government is unlikely to send checks to consumers regardless of the Supreme Court’s outcome, except perhaps in the event of a short-term recession, Zandi said.

“This would require a bill, but I don’t think Congress would pass it, even under reconciliation,” Zandi said.