If legal challenges to Trump's tariffs prove successful, the U.S. Treasury might be required to issue significant refunds, according to Bessent's warning.
The Supreme Court is currently reviewing President Donald Trump's tariff plan, a decision that could have significant implications for both the government and businesses in the United States.
In an NBC interview, US Treasury Secretary Scott Bessent stated that the tariff plan, if upheld by the Supreme Court, will hold up. However, he warned that waiting for the Court's decision until the middle of next year could mean between $750 billion and $1 trillion in tariffs being collected, only to be refunded later. This collection and subsequent refund could cause serious disruptions.
Last month, the federal appeals court decided that most of Trump's tariffs were unlawful. The ruling was based on the premise that Trump overreached his authority when announcing wide-ranging "reciprocal tariffs" on almost every country. The US Court of Appeals for the Federal Circuit made this decision.
The administration has already used Section 232 of the Trade Expansion Act of 1962 to expand steel and aluminium tariffs and is considering targeting semiconductors and pharmaceuticals. If the Supreme Court strikes down Trump's tariff plan, the Treasury would have to issue huge refunds, possibly on nearly half of the tariffs already collected. This could be terrible for the Treasury, according to Bessent.
The Trump administration has asked the Supreme Court to fast-track a ruling on the tariffs. Trump's legal team has asked the Supreme Court to hear the case in November and to rule quickly on the legality of the tariffs. The ruling has been paused until October 14, allowing the administration to appeal to the Supreme Court.
It's important to note that there is no specific information available about a person or organization announcing plans to renew tariffs under the Trade Expansion Act of 1962 if they are rejected. The current information primarily focuses on the use of existing trade policies, such as the executive orders related to reciprocal tariffs starting in April 2025.
The removal of an exemption on goods valued under $800 has affected low-cost imports, cutting postal shipments into the US by more than 80%, according to the Universal Postal Union. This could potentially impact the flow of goods into the country if the tariffs are upheld.
In conclusion, the Supreme Court's decision on the tariffs could take months. Regardless of the outcome, the administration is preparing alternatives, including relying on other trade laws such as Section 232 of the Trade Expansion Act of 1962. The potential impact on the economy and businesses is significant, and the decision will be closely watched.
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