Supreme Court cannot stop all of Trump’s tariffs. Deal with it, officials say

Reuters, Washington, Nov. 3 – U.S. S. OTC Industrial Technologies, a manufacturer of factory equipment, has long relied on low-cost nations to supply parts, initially from China and then India. However, CEO Bill Canady’s supply chain calculations have been completely upended by President Donald Trump’s series of tariffs on various trading partners.

Canady told Reuters, “We transported goods from China to some of those other countries, and now the tariffs on those are as bad or worse.”. “To avoid going bankrupt in the near future, we simply need to persevere and work our way through this. “.

THE LOWER COURTS DISPUTE TRUMP.

When lower courts decided that the Republican president had overreached himself in enforcing broad tariffs under a federal law intended for emergencies, the court—whose conservative majority of 6-3 has supported Trump in a number of significant rulings this year—is considering the appeal from his administration.

Trump’s favorite tool for punishing nations that irritate him on non-trade political issues would be eliminated if a ruling invalidated his use of the 1977 International Emergency Economic Powers Act, or IEEPA, to swiftly impose broad global tariffs. These have included everything from India’s purchases of Russian oil that support Russia’s war in Ukraine to Brazil’s prosecution of former president Jair Bolsonaro.

Trump addressed reporters on Air Force One on Sunday, saying, “If we don’t have tariffs, we don’t have national security, and the rest of the world would laugh at us because they’ve used tariffs against us for years and took advantage of us.”.

For years, we were the target of abuse from numerous nations, including China; this is no longer the case. Trump reaffirmed a major defense of the duties by saying, “Taxes have brought us tremendous national security.”.

Trump also said he will not be at the arguments on Wednesday, although he had previously said he might.

Trump is the first to impose tariffs using this law, which has historically been used to impose harsh economic penalties on enemies. When a national emergency is declared, the law gives the president broad authority to control a range of economic transactions. Trump determined a $1.02 trillion U.S. A. Overdoses of the frequently abused painkiller fentanyl were also mentioned, along with the 2024 goods trade deficit being declared a national emergency, despite the fact that the US has experienced trade deficits annually since 1975.

U. S. . Treasury Secretary Scott Bessent stated that he anticipates the IEEPA-based tariffs being upheld by the Supreme Court. However, Bessent stated in an interview that if the tariffs are struck down, the administration will just turn to other tariff authorities, such as Section 122 of the Trade Act of 1974, which permits broad 15 percent tariffs for 150 days in order to address trade imbalances.

Bessent stated that Trump may also use the Tariff Act of 1930’s Section 338, which permits tariffs of up to 50% on nations that discriminate against the United States. S. . trade.

Bessent stated, “You should assume that they’re here to stay,” in reference to Trump’s tariffs.

Bessent went on to say that “you should honor your agreement” with Trump regarding nations that have negotiated trade agreements that lower tariffs. “You guys who got a good deal ought to keep going. “,”.

Only some of the tariffs that Trump has imposed this year are covered by the Supreme Court case. For some tariffs, his administration is already using other authorities. In addition to tariffs under Section 301 of the Trade Act of 1974 pertaining to unfair trade practices investigations, he is occupied with accumulating tariffs under Section 232 of the Trade Expansion Act of 1962 involving national security concerns to safeguard strategic sectors such as automobiles, copper, semiconductors, pharmaceuticals, robotics, and aircraft.

“This administration is committed to tariffs as a cornerstone of economic policy, and companies and industries should plan accordingly,” Tim Brightbill, co-chair of the trade law practice at the Washington-based law firm Wiley Rein, said.

Power in negotiations.

Officials in the Trump administration have praised his tariffs for forcing EU and Japan, two of the biggest trading partners, to make significant concessions that will lower the U.S. A. trade deficit, claiming that those compromises will stand up in court.

U. A. Trade partners have already made up their minds and are not waiting for a Supreme Court decision. The U. S. . The office of the trade representative has announced finalized framework trade agreements with Vietnam, Malaysia, Thailand, and Cambodia that lock in tariff rates between 19 and 20 percent. A 15 percent tariff on South Korea’s automobiles and other goods was unlocked when the country agreed to terms on a $350 billion investment plan.

Because China is prepared to retaliate against the United States and cut off its supplies of rare earth minerals and magnets that are vital to the U.S., negotiations with China have proven more challenging. S. high-tech manufacturing, including semiconductors and automobiles.

Rather than making significant concessions, Trump’s administration has been forced to accept extensions of a fragile truce that lowered tariffs between the United States and China in order to maintain the flow of rare earths.

During discussions with Chinese President Xi Jinping in South Korea last Thursday, Trump agreed to cut the U.S. A. China will halt its strict licensing requirements for international rare-earth exports for a year in exchange for a one-year halt in stronger technology export controls and a ten percent tariff rate on Chinese goods linked to fentanyl.

While Trump halted new U.S. purchases, Xi agreed to resume purchases of U.S. soybeans that China had stopped for months. S. . port charges for a year for ships connected to China.

Investment and revenue issues.

Financial markets, which have become used to the Trump tariff situation, may be rocked if the Supreme Court overturns the IEEPA tariffs, according to some investors.

Refunding over $100 billion in IEEPA tariff collections and losing hundreds of billions of dollars in revenue each year is a significant cause for concern, especially in the Treasury debt market.

The largest amount of the $118 billion increase in net customs receipts in the fiscal year 2025, which concluded on September 30, comes from IEEPA tariffs collected thus far this year. This contributed to the decline of the U.S. economy by offsetting increases in healthcare, Social Security, interest, and military spending. A. deficit to a modest $1,715 trillion.

According to Ernie Tedeschi, a senior fellow at the Yale University Budget Lab, “it’s a significant political economy risk that we get addicted to tariff revenue,” which makes it more difficult for any subsequent presidential administration to reduce the duties.

Since a tariff reversal “is unprecedented at this scale” for the United States, getting the money back would also be challenging. S. . Angela Lewis, global head of customs at freight forwarder and customs broker Flexport, stated about Customs and Border Protection.

Individual importers may be required to submit applications for “post-summary corrections” to the agency, which Lewis pointed out is a convoluted procedure that could take years and isn’t worth it for some smaller businesses. For individuals receiving reimbursements, U. S. . Additionally, taxpayers would be responsible for daily compound interest costs of 6% annually.

Timing of inflation.

Cost management presents the largest challenge. According to academic research and executive comments, importers have largely absorbed the tariffs, lowering profit margins while preventing higher consumer prices and preserving market share.

Oxford Economics estimated that tariffs added 0.4 percentage points to September’s Consumer Price Index annual rate of 4.0 percent, keeping inflation well above the Federal Reserve target, even though this has so far reduced the inflationary impact. The study also found that cost pass-throughs are expanding through the prices of clothing and other goods.

As we enter the third quarter of earnings season, multinational corporations have reported over $35 billion in tariff-related expenses, causing corporate earnings to suffer the most.

OTC, based in Ohio, creates and constructs automation systems and factory production lines. According to CEO Canady, businesses like his will soon have to “place their bets” on where to move production in order to achieve a more sustainable cost base. That might mean going back to U. A. shores for luxury goods and Mexico for cheaper components.

Canady stated that, regardless of the legal justification Trump uses, “I think the new normal is going to be 15 percent” in reference to his tariffs. They will refer to it as they see fit in order to make it unassailable. “.”.

David Lawder provided the reporting; Dan Burns and Will Dunham edited; David Gaffen, Joseph Ax, Jasper Ward, and Andrea Shalal contributed additional reporting.