News
Tariffs may rise extra 10% if US Supreme Court holds against Trump powers
View(s):By Kapila Bandara
US President Donald Trump is prepared to unilaterally increase tariffs immediately by 10% overall for six months if the Supreme Court delivers an unfavourable opinion on the legality of duties imposed in April last year.
National Economic Council Director Kevin Hassett told Fox Business in a 7:54 am live (Washington time) interview Friday from the White House, the administration is “highly confident’’ the Supreme Court “will side with us’’ and that the “legal analysis is on our side’’.
But, he said there is a solid backup plan. President Trump can impose a 10% tariff “right away’’ and use Section 301 and 323 authorities.
The 10% tariff would last for six months, Mr Hassett said.
He expects the Supreme Court to be “really really supportive’’ of the president’s plan. “We’ve got a huge reduction in the deficit’’, and “really really high economic growth’’ and inflation is way down. He may have been referring to the October trade deficit.
Commerce Department data show the trade deficit in the six months from April fell to a new low of US$29.4 billion in October.
Section 122 of the Trade Act 1974 has provisions for temporary import surcharges or quotas to address serious trade deficits, subject to a limit of 15% and 150 days.
President Trump imposed tariffs last April under the International Emergency Economic Powers Act (IEEPA) and it ended up in the Supreme Court.
This came after the US Court of Appeals for the Federal Circuit said in a 7-4 decision in September that only the Congress has power to “impose taxes such as tariffs’’ and that the power is vested by the Constitution “exclusively in the legislative branch’’. The court then stayed its decision ahead of an appeal in the Supreme Court.
In late May, the US Court of International Trade rejected Mr Trump’s use of the Emergency Economic Powers Act, to impose tariffs.
Tariffs are an extremely old tool and President Trump is resorting to a decades old playbook. Historical records from the US State Department show that until 1913 when the 16th Amendment to the US Constitution allowed the US Government to raise revenue through income taxes, tariffs helped raise revenue. Tariffs generated up to 95% of revenue.
President Herbert Hoover increased tariffs by 20% on almost all imports after the 1929 stock market crash, and trading partners imposed reciprocal tariffs. World trade crashed “by 65%’’. In the 1920s the US used high tariffs to protect its nascent industries as well.
For the Republican Party, tariffs had been a go-to policy. But in 1913, the Democrats lowered tariffs through the Underwood-Simmons Tariff Act.
The Trump Administration is raking in billions from duties since April 2025.
US Customs and Border Protection reported in December that “between January 20 and December 15’’, it collected more than US$200b in tariffs.
But more than 1,000 importers are now demanding refunds if the apex court rules against tariffs.
The justices listened to oral arguments from counsel on 5 November. During arguments, Justice Sonia Sotomayor noted tariffs are a Congressional power, not a Presidential power.
The US Supreme Court does not announce in advance on which date it will decide a case or cases. But the court may present its opinion next week. The case before the court is Learning Resources v. Trump, supported by the Liberty Justice Center.
An opinion was expected last week, but it was not to be.
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