NextFin News - Three months after hearing oral arguments in a case that could fundamentally reshape the American constitutional balance of trade power, the U.S. Supreme Court remains in a state of high-stakes deliberation. As of January 28, 2026, the nation’s highest court has yet to issue a ruling on whether U.S. President Trump exceeded his authority by utilizing the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on goods from China, Mexico, and Canada. The delay has left importers, global markets, and international trading partners in a state of prolonged legal limbo, with approximately $150 billion in collected duty deposits hanging in the balance.
The legal challenge, consolidated under cases such as V.O.S. Selections, Inc. v. Trump, centers on the administration’s 2025 executive orders. These orders implemented "trafficking tariffs" aimed at curbing fentanyl flows and "reciprocal tariffs" designed to address trade deficits. According to Womble Bond Dickinson, the Federal Circuit previously ruled that while IEEPA allows the U.S. President to regulate or prohibit transactions during emergencies, it does not grant the explicit power to impose revenue-raising duties—a prerogative traditionally reserved for Congress under Article I of the Constitution. The Trump administration has countered that national security threats, ranging from drug trafficking to industrial erosion, justify the broad application of emergency economic powers.
The extended deliberation period, which began after arguments were heard in late 2025, suggests a deep ideological or technical divide among the justices. Legal scholars note that the Court is likely grappling with the "Major Questions Doctrine," which requires Congress to speak clearly when delegating powers of vast economic and political significance. According to Rodriguez, a constitutional law professor at Georgetown University, the delay often indicates that the justices are meticulously crafting language to avoid unintended consequences for future executive actions or are seeking a broader consensus to bolster the legitimacy of a landmark decision.
For the private sector, the silence from the Court is increasingly costly. Data from U.S. Customs and Border Protection (CBP) indicates that IEEPA-assessed tariffs reached $133.5 billion by mid-December 2025, with the total now estimated to exceed $150 billion. A ruling against the U.S. President would not only invalidate the current tariff regime but could also trigger a chaotic refund process. However, industry analysts warn that refunds will not be automatic. Importers must navigate complex protest procedures, and a secondary market has already emerged where firms are selling their refund rights at significant discounts to liquidity providers to hedge against further judicial delays.
Despite the potential for a legal setback, the administration appears to be preparing a "statute-substitution" strategy. According to Bessent, the U.S. Treasury Secretary, the executive branch has built a parallel architecture using Section 232 of the Trade Expansion Act and Section 301 of the Trade Act of 1974. These statutes provide more explicit, albeit procedurally more rigid, scaffolding for tariff imposition. If the Supreme Court strikes down the IEEPA-based duties, the administration could theoretically recreate the functional equivalent of the current regime within 24 to 48 hours by shifting the legal justification to these alternative authorities.
Looking ahead, the eventual ruling will likely establish the "limiting principle" for 21st-century trade wars. If the Court blesses the use of IEEPA for tariffs, it effectively creates a rapid-deployment economic weapon that any future U.S. President could wield with minimal congressional oversight. Conversely, a rejection would force the White House back into the slower, more transparent processes of traditional trade law. Regardless of the outcome, the effective U.S. tariff rate, which climbed from 2.2% in early 2025 to over 10% by late last year, is unlikely to see a permanent decline as the administration remains committed to its protectionist agenda through whatever legal avenues remain open.
Explore more exclusive insights at nextfin.ai.