The Supreme Court ruling sends US tariff policy back to the drawing board

The Supreme Court of the US (SCOTUS) has ruled against the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to implement most of its tariff increases to date. This is a setback for the administration’s tariff policy, immediately lowering the overall US statutory tariff rate to 8.3% from 12.7%.

We have modelled an initial IEEPA invalidation scenario, assessing the implications for GDP, inflation as well as federal debt and deficits.

What you will learn in this report:

• Any economic boost from lowering tariffs in the near term will likely be partly offset by prolonged uncertainty.
• The SCOTUS verdict is something the White House can work around, as it has other legal means to recreate a roughly 12.7% tariff rate; a key motivation to do so is fiscal.
• Prior to the SCOTUS decision, the baseline forecast was for federal customs duties to total $3.6tn over 2026-2035. With the IEEPA tariffs struck down, the federal government will take in only $2.3tn in tariff revenue over the same period.
• Even if the administration replicates the overall level of tariffs using other means, the by-sector and by-country implications could end up looking quite different, which will create another bout of trade policy uncertainty for businesses, investors, and households. This uncertainty is a key downside risk that could ding, rather than derail, growth this year.