Nearly $200 billion in tariff refunds may hinge on Supreme Court appeal after federal court decision
Nearly US$200bn in tariff refunds may be at stake after a US federal appeals court ruled that most of US President Donald Trump’s sweeping levies were illegal, as reported by Reuters.
The decision, delivered in a 7–4 vote by the US Court of Appeals for the Federal Circuit, allows the tariffs to remain in place until October 14 while the administration prepares an appeal to the Supreme Court.
The uncertainty unsettled financial markets on Tuesday, with Wall Street’s main indexes falling about 1 percent and longer-dated US Treasury yields rising amid a global bond selloff on fiscal concerns, according to Reuters.
Glenmede strategists warned that if courts require refunds of tariffs collected under emergency powers, the outcome “could be a (nearly) US$200 billion decision.”
The ruling examined tariffs Trump imposed in April under what he called “reciprocal” measures, as well as a separate set introduced in February against China, Canada, and Mexico to stem imports of fentanyl, reported CBC News.
These actions were justified under the 1977 International Emergency Economic Powers Act (IEEPA).
The decision did not affect tariffs imposed under other legal authorities, such as those on steel and aluminum.
Trump said his administration would request an expedited ruling from the Supreme Court as early as Wednesday “because we need an early decision.”
Jim Baird, chief investment officer at Plante Moran Financial Advisors, noted that “whether it’s the level (of the tariffs) or the timing or now questions about their validity, we’ve just got to let it play out.”
US Treasury Secretary Scott Bessent told Reuters he was preparing a legal brief for the solicitor general, highlighting expanding trade deficits and fentanyl overdoses as justifications for emergency powers.
He said, “If this is not a national emergency, what is? When can you use IEEPA if not for fentanyl?”
As per CBC News, Bessent expressed confidence that the Supreme Court will uphold the use of IEEPA but acknowledged backup options exist, such as Section 338 of the Smoot-Hawley Tariff Act of 1930, which allows the president to impose temporary tariffs of up to 50 percent.
Market participants remain cautious.
RBC’s head of US equity strategy Lori Calvasina wrote that “corporate uncertainty around tariffs will remain elevated, though lower than late spring levels.”
Raymond James policy analyst Ed Mill added that while the legal process may shift, “the outcome on tariffs will largely stay the same.”
Meanwhile, Canada and the US remain in negotiations.
CBC News reported that Prime Minister Mark Carney announced in late August that Canada lifted most counter-tariffs on US goods to revive talks, though details on unresolved issues were not disclosed.
Bessent dismissed suggestions that tariffs were driving China, Russia, and India closer together, telling Reuters that such gatherings were “performative.”
He added that the US was making progress in convincing Europe to join Washington’s tariff push against India over Russian oil imports, but did not specify whether similar measures were planned for China.
