Tariffs Case Not Decided as Anticipated
The United States Supreme Court did not issue a ruling on President Donald Trump’s tariffs on Tuesday, contrary to expectations. The Court’s latest batch of decisions, released Tuesday morning, did not include the anticipated tariffs case.
Reports indicate that the justices are scheduled to hear arguments on Wednesday regarding Trump’s effort to remove Federal Reserve Governor Lisa Cook. However, this session is not slated for opinion releases.
Following Wednesday's proceedings, the court is preparing to commence a four-week recess. Under its standard procedures for releasing opinions, the next potential date for a decision on the tariffs is February 20.
Market Sentiment on Court's Decision
At hearings conducted late last year, the justices expressed significant skepticism regarding the White House’s claims concerning the tariffs. This judicial posture has led to a shift in market expectations, with a reduced probability that the Supreme Court will rule in favor of Trump.
According to data from the betting website Polymarket, there is currently a 31% chance that the court will side with the White House. This probability has seen a decrease since the beginning of the month.
Potential Legal Ramifications of the Ruling
Trade lawyers suggest that an upcoming US Supreme Court ruling on President Donald Trump’s tariffs could curtail his legal authority to enact new tariff threats. This includes potential tariffs aimed at NATO members concerning Greenland’s sovereignty.
These lawyers have stated that the tariff threats made by Trump over the weekend likely depend on the same legal foundation under the International Emergency Economic Powers Act (IEEPA) that the Supreme Court is set to review.
Michael Lowell, a partner and chair of the Global Regulatory Enforcement Group, commented, "Similar to the Brazil tariffs, if the Supreme Court rules IEEPA doesn’t give the president tariff power, then these tariffs being threatened on NATO members would be illegal."
As previously reported, Trump announced on Saturday that if a deal is not reached for Washington to acquire Greenland, Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland would face escalating tariffs. These would commence at 10% on February 1 and rise to 25% on June 1.
According to Michael Lowell, if the Court overturns the tariffs, companies within the targeted NATO group that would have been subject to these tariffs might need to pursue new legal actions. He elaborated, “It may still be necessary for companies that import from those countries to bring suit to enforce […] that would be a quick lawsuit since the law would be clear by the ruling.”
European leaders have characterized this latest tariff action as a form of blackmail. They are reportedly considering various responses, including the implementation of an anti-coercion instrument that could restrict US access to the European Union, the world’s third-largest economy.
Alternative Tariff Strategies and Legal Challenges
Treasury Secretary Scott Bessent has expressed that it is "very unlikely" the Supreme Court will overturn Trump’s utilization of emergency powers for imposing tariffs. He indicated that even if the administration were to lose the case, new tariffs would be implemented immediately.
Trade attorneys also suggest that the president could leverage the recently concluded Section 232 investigation on critical minerals to impose tariffs. Greenland, a territory rich in minerals, is a semi-autonomous part of Denmark.
The Section 232 investigation stipulates that if negotiations are unsuccessful, "it may be appropriate to impose import restrictions, such as tariffs, if satisfactory agreements are not reached in a timely manner."
In the context of the latest Section 232 policy concerning critical minerals, the language explicitly reserves the right for the executive branch of the government to allow the president to impose tariffs.
However, a ruling against Trump on tariffs would represent his most significant legal setback since his return to the White House. A decision unfavorable to Trump could also pave the way for refunds exceeding $130 billion.