Trump's Tariffs Are Likely Headed to the Supreme Court. What Now?

The Trump administration is gearing up for a Supreme Court showdown after an appeals court struck down many of the president's tariffs last week, affirming a lower court's decision.

At stake in this legal challenge are most — but not all — of the tariffs that have been in the news since "Liberation Day" on April 2, including tariffs on about 90 countries that finally went into effect in early August after several delays and extensions. The appeals court ruling is a legal setback for the president, but the affected tariffs will remain in place through at least Oct. 14.

Consumers and businesses concerned about the impact of tariffs on their wallets will now have to wait for an outcome as the administration just made its appeal to the Supreme Court. In the meantime, as President Donald Trump confirmed in a Truth Social post following the appeals court ruling, "ALL TARIFFS ARE STILL IN EFFECT!"

Will Trump's tariff lawsuit stop price increases?

The U.S. Court of Appeals for the Federal Circuit's 7-4 opinion stated that the International Emergency Economic Powers Act, or IEEPA, does not give the president the power to put tariffs of "unlimited duration on nearly all goods from nearly every country in the world."

The decision affects Trump's reciprocal tariffs of up to 50% on countries with large trade imbalances and a baseline 10% tariff on all other nations, both of which were announced in April. It would also void higher tariffs for Canada, Mexico and China revealed in February.

It's worth noting tariffs on steel, aluminum and automobiles do not rely on the IEEPA and are unaffected by this case. In the coming weeks, Trump will reportedly add more sector-specific tariffs, which are less vulnerable to legal challenges.

According to the National Foreign Trade Council, a pro-trade business group, shoppers shouldn't rejoice just yet.

"Businesses and consumers who are looking for short-term relief are going to be disappointed as the appeals process continues to play out over the coming months," the council's president, Jake Colvin, tells Money in an email. "Even if these tariffs are struck down, the uncertainty for businesses isn’t going away given the overwhelming likelihood that [the] administration will rely on other authorities to impose duties."

Why the ruling doesn't mark the end for tariffs

Economists are telling consumers to brace for higher inflation in the second half of the year as tariff costs get passed along. Recent government inflation data shows that prices are already rising in certain categories like women's dresses, audio equipment and coffee. Tariffs are expected to drive inflation for other imported goods in the coming months, too, as pre-tariff inventories and stockpiles are exhausted.

With this in mind, some groups are hoping that the ongoing legal challenge could eventually stop the president's tariffs. One example is the state of Oregon, which is part of a 12-state coalition challenging the tariffs alongside a few small businesses, including a wine importer.

In a statement, Oregon Attorney General Dan Rayfield said the appeals court's "ruling is a huge win for Americans." Rayfield added that the result "couldn’t come at a better time, as people are walking into their local stores and seeing price increases for school supplies, clothes and groceries."

Jeffrey Schwab, an attorney representing V.O.S. Selections — the wine importer in question — also celebrated the opinion in a statement: "This decision protects American businesses and consumers from the uncertainty and harm caused by these unlawful tariffs," said Schwab, the director of litigation at the Liberty Justice Center.

But the situation is far from final.

Treasury Secretary Scott Bessent told Reuters Monday that the administration likes its odds at the Supreme Court, where Trump will hope to find support from a 6-3 conservative majority. A legal outcome is never guaranteed, however, and it's worth noting that a Republican-appointed judge on the appeals court sided against the president.

On Wednesday, Trump asked the Supreme Court to weigh in on the issue, proposing a schedule that would put oral arguments in November.

"It's a very important decision, and frankly, if they make the wrong decision, it would be a devastation for our country," he said earlier in the week when talking to reporters.

Bessent told Reuters that the administration has a Plan B, as well.

"There are lots of other authorities that can be used," he said, though he acknowledged that they are "not as efficient, not as powerful" as the IEEPA.

Bessent mentioned Section 338 of the Smoot-Hawley Tariff Act, a tariff authority that maxes out at a 50% rate and can only be used for five months. The administration is also expected to lean on sector-specific tariffs justified on national security grounds using Section 232 of the Trade Expansion Act of 1962. And in his first term, Trump used Section 301 of the Trade Act of 1974.

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