The U.S. Supreme Court will hear oral arguments on the Trump tariff case on November 5th. The risk of a trillion dollar tax refund could trigger market volatility.

The U.S. Supreme Court announced on Thursday that it will hold oral arguments on November 5 to determine the legality of President Trump's global tariff plan implemented during his second term. This will be a major test for Trump's core economic and trade policy principles. The focus of the case is whether Trump has exceeded his presidential powers and abused the emergency powers granted by the International Emergency Economic Powers Act (IEEPA). Since February 2025, Trump has declared a "national emergency" citing reasons such as drug smuggling, illegal immigration, and trade deficits, and has imposed universal tariffs of at least 10% on imported goods from most countries, including China, Canada, and Mexico, as well as higher "reciprocal tariffs." U.S. Treasury Secretary Brent warned that if the Supreme Court rules these tariffs illegal, the Treasury Department will have to refund roughly half of the collected tariff revenue, putting a heavy burden on federal finances. Brent warned that if the final ruling is delayed until June 2026, it could involve refunds of $750 billion to $1 trillion, potentially leading to economic chaos. Trump has taken a strong stance, stating that if the tariffs are revoked, the U.S. will face an "economic disaster." He has requested the Supreme Court to expedite the proceedings, but legal experts point out that the fastest ruling could still take several months. If the court ultimately overturns some of the tariffs, businesses may be able to apply for refunds, which could provide a short-term boost to company finances and stock prices. Rohit Tripathi, Vice President of Manufacturing Strategy at Relex, stated that company profits would immediately improve, but consumers may not feel significant price reductions in the short term as many companies have already absorbed or shifted the tariff costs within their supply chains. Drew DeLong, head of the Geopolitical Department at Kearney consulting firm, pointed out that if Trump loses the case, businesses will face a series of operational challenges, first needing to confirm eligibility for refunds and then dealing with a possible "tariff vacuum period." Before the new policy is implemented, companies may rush to restock, causing short-term disruptions in the supply chain and price fluctuations. Wall Street analysts predict that in the short term, stocks of companies highly dependent on tariffs may rise as the market anticipates adjustments, but long-term uncertainty remains high. Experts note that even if the court overturns the tariffs, consumers may not immediately benefit during the upcoming holiday shopping season, as imports and inventory purchases for this year have already been completed months ago. Tripathi estimates that it could take at least 6 to 8 months to see a gradual recovery in market inventory, with consumers gradually experiencing price reductions a year later. Katie Thomas, head of the Consumer Research Institute at Kearney, emphasized that consumers will not receive refunds for past transferred tariffs, but some companies may use refunds to reduce layoffs and lower retail prices to some extent. She pointed out that reducing economic and policy uncertainty is key to truly benefiting consumers, a goal that may be difficult to achieve in the short term. If the Supreme Court rules that Trump abused the IEEPA, the White House may quickly take alternative measures. DeLong's analysis suggests that the most likely option is to temporarily impose tariffs of up to 15% on imported goods using emergency tariff powers under Section 122 of the Trade Act of 1974, with a maximum duration of 150 days. During this time, the government can initiate investigations under Section 301 into specific countries, allowing for targeted tariffs, but the process is complex, time-consuming, and fraught with political uncertainty. Furthermore, the Trump administration may seek legislative support from Congress, but since tariff policies are not popular in Congress, this approach carries higher risks. On August 1, Trump announced high tariffs of 39% on Swiss exports, which took effect on August 8, citing a long-standing trade imbalance between the U.S. and Switzerland. The latest data shows a significant 22% decrease in Swiss exports to the U.S. (excluding gold) from August to July, with watch exports dropping by 8.6% and gold exports plummeting by 99%, to only 0.3 tons. The U.S.-Swiss trade deficit has narrowed to 20.6 billion Swiss francs, reaching its second-lowest level since 2020. The Swiss government made a last-minute attempt to persuade Trump to abandon the tariffs before they took effect, but was unsuccessful. Negotiations between the two parties are ongoing, with U.S. Commerce Secretary Lutnick stating last week that it is "very likely to reach an agreement with Switzerland," but without revealing specific details. To diversify exports away from the U.S., Switzerland has signed a free trade agreement with South America.