The Supreme Court is expected to issue what could be one of the most consequential economic rulings in recent memory today, deciding whether President Trump's broad-based tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are constitutional. The decision carries profound implications for trade policy, market stability, and potentially $100 billion in collected duties.

What's at Stake

At the heart of the case, known as Learning Resources v. Trump, is a fundamental question: Does the President have the authority to unilaterally impose broad import tariffs by declaring a national emergency under a 1977 law designed for entirely different purposes?

The challengers—a coalition of businesses affected by the tariffs and 12 predominantly Democratic-governed states—argue that the power to levy tariffs rests with Congress, not the executive branch. They contend that IEEPA was never intended to authorize sweeping trade measures.

The stakes extend far beyond legal technicalities. Since implementation, the tariffs have generated an estimated $100 billion in duties paid by American importers—costs largely passed on to consumers through higher prices.

What the Justices Signaled

During oral arguments in November, both conservative and liberal justices expressed skepticism about the administration's legal position:

"Tariffs are a form of taxation, which is the responsibility of Congress."

— Chief Justice John Roberts, during oral arguments

The questioning suggested potential bipartisan judicial concern about executive overreach in trade policy—though predicting Supreme Court outcomes from oral arguments remains notoriously unreliable.

The Possible Outcomes

Legal experts have outlined several potential scenarios:

Full invalidation: The Court could rule that IEEPA does not authorize tariffs, striking down the duties entirely. This would likely require the government to refund collected tariffs—a massive fiscal undertaking.

Prospective relief only: The Court might invalidate future tariffs while limiting its decision to prospective application, avoiding the refund question but ending the tariff regime going forward.

Narrow ruling: The justices could issue a narrow decision that addresses specific aspects of the tariffs without resolving the broader constitutional question.

Administration victory: Though oral arguments suggested otherwise, the Court could uphold executive tariff authority, preserving the current trade policy framework.

Treasury's Contingency Planning

The administration has prepared for an adverse ruling. Treasury Secretary Scott Bessent told reporters that the Treasury has sufficient funds to cover potential tariff refunds, with approximately $774 billion in cash reserves available.

National Economic Council Director Kevin Hassett indicated the administration has contingency plans to reimpose tariffs through alternative legal mechanisms should the Court rule against them.

"We have contingency plans to impose the tariffs if the Supreme Court rules against them. The plan would allow the levies to be put back immediately."

— Kevin Hassett, National Economic Council Director

Market Implications

For investors, today's ruling presents a complex risk-reward calculus:

If tariffs are struck down:

  • Import-dependent retailers could see margin improvement as costs decline
  • Inflation pressures may ease, potentially influencing Fed rate trajectory
  • Short-term volatility likely as markets digest implications
  • Trade-sensitive sectors could experience significant moves

If tariffs are upheld:

  • Current trade policy framework remains intact
  • Inflation pressures from tariffs persist
  • Market relief rally possible as uncertainty resolves
  • Executive trade authority precedent strengthened

How to Position

Given the binary nature of today's potential ruling and its unpredictable outcome, investors should consider:

  • Avoiding concentrated bets on any specific outcome
  • Maintaining diversification across sectors with varying tariff sensitivities
  • Keeping some powder dry to capitalize on post-ruling volatility
  • Reviewing import-exposed holdings for potential opportunities regardless of outcome

The Court typically releases opinions at 10 a.m. Eastern. Regardless of the ruling, expect elevated market volatility as traders digest what could be a watershed moment in American trade policy.