Top White House officials spent Thursday night on a call mapping out what to do if the Supreme Court says no to President Trump’s emergency tariff powers.
Kevin Hassett, who runs the National Economic Council, said Friday the administration isn’t sitting around waiting to see what happens. They’ve already figured out other ways to keep the tariffs going.
“There are a lot of other legal authorities that can reproduce the deals that we’ve made with other countries, and can do so basically immediately,” Hassett told CNBC’s “Squawk on the Street.” He said they expect to win, but if they don’t, they’ve got other tools ready to go.
Trade Representative Jamieson Greer has been heavily involved in working out these Plan B options, Hassett said.
Friday came and went without the tariff ruling everyone was expecting. The court put out one decision, but it had nothing to do with tariffs. Next chance for a ruling is Wednesday.
The case boils down to two big questions
Can Trump use the International Emergency Economic Powers Act to slap on these tariffs? And if not, does the government have to give money back to importers who already paid up?
But the court might not pick either extreme. They could say Trump gets to use emergency powers in a limited way and only some importers get refunds. There’s a bunch of ways this could shake out, and Wall Street’s been watching it like a hawk.
Treasury Secretary Scott Bessent said Thursday he’s expecting what he called a “mishmash” ruling when it finally drops.
“What is not in doubt is our ability to continue collecting tariffs at roughly the same level, in terms of overall revenues,” Bessent told people in Minneapolis. “What is in doubt, and it’s a real shame for the American people, was the president loses flexibility to use tariffs both for national security, for negotiating leverage.”
Trump used the emergency law partly to crack down on fentanyl coming into the country.
Jose Torres, senior economist at Interactive Brokers, said a loss in court would shake things up in several ways.
“If the court blocks the tariffs, the administration is going to find workarounds,” Torres said. “President Trump is very ambitious in getting this agenda through despite potential controversies that could surround such a decision.”
Blocking the tariffs would mess up efforts to bring factories back to America and make the budget deficit worse, pushing rates up, Torres said. The flip side? Companies would see their costs drop and trade would flow easier.
The betting markets aren’t optimistic for Trump.
Kalshi shows only a 31% chance the court sides with the administration. Torres said his firm’s clients are thinking along the same lines.
Bessent has talked about having at least three other routes through the 1962 Trade Act that would keep most tariffs alive. But he’s worried about having to pay importers back—that could really squeeze the budget and make cutting the deficit harder.
Tariffs brought in $195 billion in fiscal 2025 and $62 billion more in 2026 so far, Treasury numbers show.
Morgan Stanley analysts think there’s “significant room for nuance” in whatever decision comes down. The court could trim which tariffs stay without killing them all, or put limits on how they get used down the road.
Analysts Ariana Salvatore and Bradley Tian said the administration might ease up on tariffs anyway, given how much politicians are talking about keeping things affordable right now.
The tariffs haven’t played out like experts thought they would. Inflation hasn’t jumped as much as predicted, and the trade deficit has plunged. Some people figured the tariffs would wreck America’s reputation in world trade. Instead, October’s trade gap hit its lowest mark since the 2009 financial crisis.
Hassett is one of the names floating around for Fed chair when Jerome Powell’s term wraps up in May. He said Friday he’s happy where he is now but will go wherever Trump wants him.
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