The US Supreme Court will review the legality of tariffs, what impact will it have? UBS provides a reference answer.

UBS research report indicates that the US Supreme Court has announced it will hold a hearing in November on the legality of certain US tariffs, increasing the possibility that some tariffs will be ruled illegal in the first half of next year. UBS believes that if certain tariffs are deemed illegal, they are likely to be replaced by new tariffs; these new tariffs may be different from the current ones, so tariff rates may increase or decrease depending on the exporting country. Those who have paid tariffs between April 2025 and the ruling period are entitled to a refund. US Treasury Secretary Bennett suggested that half of the tariff revenue could be refunded. This amounts to 0.5% to 0.7% of the Gross Domestic Product (GDP), which will be added to the budget deficit. UBS points out that refunding tariff payments is a form of tax refund. US companies that have paid tariffs will receive an unexpected cash payment; it is estimated that about two-thirds of tariff payments come from small US companies. Like past income tax refund checks, refunded tariffs could become a fiscal stimulus measure. In addition, UBS adds that there may be inflation discrepancies due to new, different tariffs replacing old ones. If changes to tariff authorization result in some tariff rates decreasing, the prices of US goods that have risen because of these tariffs may not fall back due to "price stickiness." However, if the new tariff system raises certain tariff rates, new inflation risks may arise.