This could set up some ructions in the bond markets should the court decide against the administration. In the first place the Treasury Department will have to repay or otherwise credit the companies that paid the tariffs in question. That could amount to somewhere between $100 billion to $200 billion and just to make things extra-interesting the debit could be booked in the fiscal year that ends in three weeks.
Secondly, the lack of income from the tariffs would require the treasury to sell some $300 billion more debt than is needed if the tariffs stand.
There are a few options* for the administration under other tariff authorities but the day of the Supreme Court decision could be challenging for market participants.
From SCOTUDblog, September 9:
Setting the stage for a major ruling on presidential power, the Supreme Court on Tuesday agreed to decide whether a 1977 federal law giving the president certain emergency powers allowed President Donald Trump to levy tariffs on nearly all goods imported into the United States through a series of executive orders.
In a brief order issued by the court’s Public Information Office on Tuesday afternoon, the court announced that it had granted review in two cases: Learning Resources v. Trump, in which two small businesses had asked the justices to weigh in on Trump’s power to impose the tariffs without waiting for a federal appeals court to rule on the Trump administration’s appeal; and Trump v. V.O.S. Selections, in which the Trump administration had asked the court to review a ruling by a different federal appeals court striking down the tariffs. The court will fast-track the two cases, which will be argued together, and hold oral arguments in early November.
In a series of executive orders, Trump imposed tariffs that fall into two categories, which collectively cover a wide range of products from U.S. trading partners. The first category, known as the “trafficking tariffs,” apply to goods from Canada, China, and Mexico, which in Trump’s view have not done enough to halt the flow of fentanyl into the United States. The second category, known as the “reciprocal tariffs,” impose a minimum tariff of 10% (which can escalate up to 50%) on products from virtually all countries.
The law at the center of the case is the International Emergency Economic Powers Act, a 1977 law that allows the president to take action to “deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States” if he declares a national emergency “with respect to such threat.” When he imposed the tariffs, Trump relied on IEEPA, and in particular on a provision of the law that authorizes the president, in times of national emergencies, to “regulate . . . importation” of “property in which any foreign country or a national thereof has any interest.”....
....MUCH MORE
*September 1 -"What Are Trump’s Options If His Tariffs Are Ruled Unlawful?"
If interested see also September 3's "Why the Supreme Court Could Uphold Trump’s Tariffs"
