4 Issues to Watch After Supreme Court Ruling Overturns Trump’s Expenses
The Supreme Court’s decision to strike down a large part of President Donald Trump’s tax policy has raised concerns about how he will deal with the domestic budget and international relations.
Taxes were expected to generate $2.5 trillion over the next decade. The loss of the portion of the tax that was ruled illegal by the court leaves a gap in Trump’s priorities for spending and reducing the deficit.
Trump also pointed out that tariffs have given him greater leverage to negotiate with foreign leaders and corporations on trade, immigration, drug use and military conflicts.
“WE ARE IN TROUBLE!” if the supreme court rejects the prices, Trump said on social media Jan. 12.
Trump had warned on social media before the high court debate in November that the country would face “economic disaster” unless tariffs remained in place and called the case “LIFE OR DEATH.”
Here are four things to watch after the Supreme Court decision.
Trump can set prices under different laws
Treasury Secretary Scott Bessent said the administration could impose taxes under other laws if the Supreme Court overturned the taxes under the International Emergency Economic Powers Act of 1977.
But Trump has argued that there are no other options that are easy for him to pose or use as a threat.
The administration increased tariffs on steel and aluminum and imposed tariffs on automobiles and parts under section 232 of the Trade Expansion Act of 1962. The law authorizes the president to impose tariffs if the secretary of the Department of Commerce determines that a product is “imported into the United States in such quantities or under conditions that threaten to endanger the national security.”
Bessent said charges could also be imposed to correct unfair trade practices under two sections of the 1974 Trade Act. One section authorizes tariffs of up to 15% for 150 days if a country has a large trade surplus, among other reasons. Another category includes “foreign practices that are unreasonable or discriminatory and burden or impede US trade.”
The administration has already held hearings on whether China’s policies governing semiconductors justify the tariffs. Trump has ordered the US trade representative to study tariffs on digital services imposed by Austria, Canada, France, Italy, Spain, Turkey and the United Kingdom.
A refund ‘could take more than a year,’ Bessent said
Even before the high court’s decision, thousands of importers, including Costco, Revlon and Goodyear, filed lawsuits in the US International Trade Court seeking to recover the estimated $150 billion they pay in tariffs.
But Trump administration officials say the companies will be reimbursed without the need for a trial if the Supreme Court rules that the amounts were illegally collected.
The Committee for a Responsible Federal Budget estimated in October that about $90 billion of the $195 billion collected in tariffs in the first year of Trump’s term could be returned, based on figures from Customs and Border Protection. The government collects more than 30 billion rands per month in tax revenue, according to Treasury statements.
Bessent told Reuters Jan. 9 that management has enough money to restore prices, but the restoration will be spread over weeks or even a year. Treasuries had about $774 billion on Jan. 8.
“We are not talking about all the money coming out in a day,” said Bessent. “Maybe weeks, months, maybe a year, right?”
The decision of the Supreme Court could cost billions in the federal budget
The spending is said to add a significant amount to Trump’s spending priorities and deficit reduction.
The nonpartisan Congressional Budget Office, or CBO, predicted in November that tariffs would generate $2.5 trillion over the next decade. By reducing the need for additional borrowing, tariffs are also expected to reduce interest payments on the national debt by $500 billion.
Trump’s emergency taxes accounted for most of that money. Lawmakers use the CBO as part of their calculations about how much to spend each year. Lower prices mean less income is available for spending.
“With today’s Supreme Court decision upholding the illegality of President Trump’s emergency spending, the country will now be nearly $2 trillion in the hole,” said Maya MacGuineas, president of the advocacy group Committee for a Responsible Federal Budget. “We’re in a bad financial situation, and it just got worse.”
The tax rates subject to the Supreme Court ruling have fluctuated over the years. But the Committee for a Responsible Federal Budget, a advocacy group, estimated in October that $90 billion in spending collected in the first year of Trump’s term could be recovered, based on figures from Customs and Border Protection.
The average American family has paid about $1,700 in tax costs since Trump took office, according to Democrats on the Congressional Joint Economic Committee. Americans paid an estimated $231 billion in taxes from February 2025 to January 2026, the committee found.
“President Trump’s taxes have been a disaster for American families, driving up costs at the worst possible time,” Sen. Maggie Hassan of New Hampshire, the top Democrat on the committee, said in a statement on Feb. 20. “Although the Supreme Court has appreciated and correctly ruled that much of Trump’s tariff agenda was an illegal exercise of presidential power, the tariffs will not reverse today’s already damaging decision.”
How will other countries react, which criticized the prices?
Foreign leaders have reacted indifferently to the decision because the Trump administration can impose tariffs in other ways than declaring a state of emergency. One law would allow tariffs on imports that threaten national security and another would allow retaliatory tariffs on countries that send more goods to the United States than it buys.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, said the decision is a legal decision, not a reset of US trade policy.
“Canada must prepare for new, less specific mechanisms to be used to reverse trade pressures, which may have far-reaching and disruptive consequences,” Laing said in a statement.
William Bain, head of trade policy at the British Chambers of Commerce, said different rules were used to impose US tariffs on steel and aluminium.
“While this decision clarifies the President’s executive power to raise prices, it does nothing to clean up the business,” Bain said in a statement.
Foreign leaders criticized the tariffs when Trump announced them before negotiating new trade deals to cushion the impact of more jobs. China’s tariffs significantly reduced agricultural imports, such as US soybeans, before reaching an armistice agreement. Trump announced $12 billion in farm aid. Canada continues to negotiate.
Trump warned of “payback” in a social media post on Jan. 12 countries and companies that will leave billions of US investments in industries and services without the threat of tariffs.
This article first appeared on USA TODAY: 4 issues to watch after Supreme Court decision strikes down Trump’s tariffs
Reporting by Bart Jansen, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
