What Happens After Tariff Ruling?

While the tariffs ruling by the Supreme Court may require a course reset for the Trump Administration, given the President’s ultimate goal, it’s more likely to be a recalibration of the route than a journey back to the starting point. 

State of Play: We always knew the IEEPA authorities, used at the scale President Trump activated them, were legally shaky. Today’s decision validated that, and the 6-3 split removes any lingering doubt about where the Court stands in aggregate.

What matters now is what the Court left on the table. The President still has multiple legal authorities that can recreate much of the tariff agenda that has, in practice, built a new wall around the U.S. as the average weighted tariff rate moved from roughly 3% to above 15% over the last year.

Justice Kavanaugh explicitly pointed to the Trade Expansion Act of 1962 (Section 232), the Trade Act of 1974 (Sections 122, 201, and 301), and the Tariff Act of 1930 (Section 338). So, the question is where we go next. I still find the Rumsfeld frame useful on days like today.

Known-Knowns

The White House has made tariffs a cornerstone of the economic agenda. In the Treasury Secretary’s words, it is one leg of a three-legged stool with tax and deregulation. I would not bet on the White House yielding on that. I strongly urge any business planning their financial forecasts to not bet on tariffs going away. The White House will move to a stopgap. 

The base case is Section 122, which can impose up to 15% for up to 150 days. It is legally defensible and it is the cleanest near-term bridge. The Court did not provide explicit direction on refunds. That turns repayment of roughly $180 billion into a political fight heading into the midterms, and it is already the boardroom topic this morning.

Known-Unknowns

What is unknown is what the White House chooses as the post Section 122 path. The choice is ultimately about speed versus durability. Section 301 is viable but slow. It requires investigations, typically country by country. Rebuilding a global baseline through 301 would mean running many investigations in parallel. Section 201 is sector specific and requires evidence of import surges threatening U.S. production. That bar is harder to clear across broad product sets. Section 338 is a true wildcard. It is on the books, but its practical durability is debated given later authorities and lack of application.

What happens to carve outs and comparative network effects, including food and agriculture exemptions, partner specific exclusion lists, and USMCA treatment? What happens to trade deals already announced or under negotiation, and whether their enforcement and sunset provisions hold under a new legal foundation? What happens on refunds in practice, including different outcomes for companies that sued versus those that did not?

We don't know how quickly the White House will pivot from broad tariff architecture to sectoral tools, especially Section 232, and how aggressively it uses those tools to rebuild leverage. We will see how trading partners respond if the U.S. retools the legal basis for the same economic outcomes, and whether any partner attempts to reopen or walk away from a deal.

Unknown-Unknowns

Watch freight and routing shifts, company behavior, and trading partner responses this week. Many companies have been in wait and see mode for the last 10 months but were just starting to adapt to the prior IEEPA norms. This decision removes any semblance of calm. As businesses navigate gaps in enforcement, country reactions, and the White House stitching together a new plan in real time, the range of outcomes expands materially.

My Expectations

--I expect Section 122 quickly, followed by clearer guidance within roughly 14 days on what replaces it. Equity and bond markets will demand a path. The White House will also likely signal to trading partners that the trajectory remains intact, including enforcement expectations and the economic security provisions embedded in recent deals. My best guess for where we go after the 150 days of Section 122 expires is an attempt to enact Section 338, as it allows for tariff rates up to 50%. There will be similar questions on legal validity of this mechanism, but it is the cleanest path for the Administration to recreate its tariff agenda with similar constructs. In the event they choose to go the legally solidified path, Section 301s would likely be the tool of choice – but 100+ investigations stretching six months would be a tall task. 

--I expect Section 232 to become a focal point for restoring leverage. With IEEPA constrained, I would plan for heavier reliance on 232 as investigations and recommendations conclude across a growing list of sectors, including semiconductors, pharmaceuticals, critical minerals, polysilicon, turbines, drones, aircraft, medical devices and PPE, robotics, and expanded metals coverage. I also expect deeper tools, including pricing floors, component level tariffs, content-based requirements, and tighter enforcement.

--I expect China to be an immediate beneficiary on paper because the loss of reciprocal and fentanyl tariffs drops the effective rate materially. That said, I do not expect the White House to reopen the lane in a major way near term. Any expansion of Section 301 on China is politically and diplomatically tricky ahead of a planned April trip, especially given China’s willingness to retaliate through non-tariff tools.

--I expect the partner country’s trade strategy to become the under discussed focus area for the Administration, who have quietly laced in several pieces of economic strategy within the deals. Several recent deals include language on economic security alignment, tightening rules of origin, and transshipment enforcement. With the cornerstone authority removed, the question is whether those commitments hold as written, get renegotiated, or get replaced by new enforcement vehicles. The direction of travel matters as much as the tariff rate.

--I expect refunds to remain messy for a long time. The Court did not provide an operational roadmap. Companies are now in two lanes: those that sued and those that did not. For litigants, expect years of lower court process and political drag. For non-litigants, shareholder pressure will rise, but the lack of certainty will not resolve quickly.

--I expect USMCA leverage to shift. Most commentary will focus on reciprocal tariffs. The loss of fentanyl tariffs also matters because it removes a major threat point on non-USMCA-compliant goods heading into the USMCA joint review this summer. Watch how the stop gap plan treats Canada and Mexico specifically. I still expect USMCA compliant goods to retain favorable treatment, but the negotiation dynamics just changed.

Tactical Recommendations: 

-Do not over rotate on refunds but get your documents organized.

-Collect historical duty payment data and supporting documentation for IEEPA duties paid since April 2nd of last year and watch carefully for any signs of refund protocol announced.

-Run a 10% to 15% scenario through the end of July. Keep current rates where they are below 15, cap higher rates at 15, then run post July scenarios where tariffs hold flat or revert toward prior reciprocal structures.

-Stress test Section 232 exposure. Map your HTS footprint to active investigations and assume scope expansion is more likely.

-Pressure test North America supply exposure ahead of the USMCA joint review. Model higher USMCA compliance thresholds, more verification activity, and tighter rules of origin. Assume the White House pushes harder now.

-Get ready on the data front. Most stopgap paths will force deeper knowledge of supply chain and bill of material data. Assess connectivity between bill of material content, origin and value granularity, and customs preparation. Expect enforcement to move closer to content level requirements and be ready for that shift.