The United States may face an unprecedented financial reckoning if the Supreme Court overturns President Donald Trump’s sweeping emergency tariffs.
Legal experts who spoke to Business Insider said the government could be liable for refunds totaling between $750 billion and $1 trillion, making it one of the largest potential reversals of federal revenue collection in U.S. history.
Despite the staggering figure, trade lawyers stress that the Supreme Court’s decision should hinge on the Constitution, not fiscal consequences.
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Two lower courts have already ruled the tariffs illegal, holding that the administration exceeded its authority under the International Emergency Economic Powers Act (IEEPA). But on Wednesday, the Supreme Court agreed to hear and expedite the case, setting up a showdown that could redefine the scope of presidential power over trade.
Trump’s legal team warned in its petition that unwinding the tariffs could be “ruinous” to the economy if refunds are ordered. Treasury Secretary Scott Bessent, in a filing to the Court earlier this month, cautioned that “delaying a ruling until June 2026 could result in a scenario in which $750 billion – $1 trillion in tariffs have already been collected, and unwinding them could cause significant disruption.”
Still, William Reinsch, Scholl Chair in International Business at the Center for Strategic and International Studies, said the Court is likely to deliver a decision by year’s end.
“My experience with the Supreme Court is that when it comes to an economic issue, they don’t always break along typical ideological lines. The economic stakes here are significant in addition to the foreign policy stakes,” he told Business Insider.
“I don’t think it’ll be unanimous,” he added, “but I wouldn’t rule out the possibility that this is the first big case where they go against the president.”
The Trillion-Dollar Problem
Since February, Trump’s administration has invoked the IEEPA—a 1970s law designed for national emergencies and economic sanctions—to impose wide-ranging tariffs. Aside from a few sector-specific duties, nearly all of the measures, from a cumulative 245% tariff on China (briefly in place) to sweeping April tariffs on more than 75 trading partners, fall under the emergency statute.
Small businesses have led the charge in challenging the tariffs, arguing that the Constitution gives Congress, not the president, the power to set duties. Both the Court of International Trade and a federal appeals court sided with challengers, striking down the tariffs as unconstitutional. Yet, the duties remain in place because lower courts declined to grant an injunction halting their enforcement.
Will Planert, a trade attorney at Morris, Manning & Martin LLP, said some conservative justices may balk at granting such broad economic power to the executive branch.
“In Biden’s attempt to modify the student loan program, for example, those justices have been very skeptical of the idea that Congress can confer very broad economic powers on the president or the federal agencies,” he explained.
Planert also questioned the government’s warning of economic ruin. “I doubt that the government losing the sum of money it did not have just half a year ago would be ‘ruinous.’ Any amount of fiscal disturbance should not be taken into consideration when the decision should rely on the Constitution,” he said.
The Tax Foundation estimates that Trump’s tariffs would raise $2.3 trillion in revenue over the next decade, though at the cost of reducing U.S. GDP by 0.9%—a drag that could worsen once foreign retaliation is factored in.
“If the tariffs are illegal, then they are illegal irrespective of fiscal impact,” Planert stressed. “In that case, the government would have collected a very large amount of money that it’s not entitled to, which would be all the more reason to have it returned.”
Refund Precedent
The U.S. has faced large-scale tariff refunds before, albeit on a far smaller scale. In 1998, the Supreme Court struck down the Harbor Maintenance Tax on exports, forcing the government to refund over $1 billion.
Robert Shapiro, chair of international trade practice at Thompson Coburn LLP, said the logistics this time would be daunting. Normally, companies must file a protest for each customs entry to receive a refund.
“Having customs do the work twice for everything just doesn’t make sense,” he said. “It may eventually be up to the Board of International Trade to decide how to do the refunds.”
And the fallout could ripple beyond importers. Shapiro noted that “since many companies were explicit that they had to raise prices due to tariffs, customers may want their money back, too, if importers are getting theirs.”
The case is shaping up as a constitutional stress test of presidential authority in economic policy.
If the Court rules against the administration, it would force the Treasury to undertake the largest tariff refund program in U.S. history, with consequences for both businesses and consumers. If it sides with Trump, the decision could cement a new precedent: giving future presidents sweeping unilateral powers to reshape global trade under the guise of emergency law.
Either way, the ruling could reverberate across decades of U.S. trade policy, setting a marker for how far executive power can extend into the nation’s economic life.