The market consensus reaction to the Supreme Court ruling on the Liberation Day tariffs exaggerates the negatives and ignores the options of the Trump administration.

Markets are overreacting to headlines about a $175–200 billion tariff refund financial hole. However, the Supreme Court ruling opens a long, narrow, and manageable process, not an imminent fiscal crisis.

In the days after the Supreme Court struck down the Trump Liberation Day tariffs, many sell-side analysts turned a complex legal ruling into a simple story, stating that Washington would soon have to repay up to $200 billion. Risk premiums in Treasuries ticked higher, gold and silver soared and some commentators warned about a looming refund shock for the U.S. budget that would make government debt soar.

Could the Supreme Court ruling imply that the Treasury is required to repay every dollar collected since these tariffs were introduced? The reality is far more complex.

The US administration has many options to maintain its trade policy.

The Supreme Court does not rule illegal any of the agreed-upon trade deals nor the tariff mechanisms. The Biden, Obama, Bush, and Clinton administrations have all implemented tariffs in the past. Furthermore, if any country decided to reject the deals that have been signed, which is unlikely, the administration can use Section 122 of the 1974 Trade Act to impose 10% tariffs for 150 days, which is what has been announced this week. This subsection allows tariffs or import surcharges when there is a balance‑of‑payments-related emergency. Furthermore, Section 338 of the 1930 Tariff Act allows tariffs as high as 50% on countries that discriminate against U.S. commerce, while Section 232 uses Commerce Department investigations to impose duties on specific products, and Section 301 targets countries and sectors after USTR investigations into unreasonable practices.

All administrations have used these mechanisms in the past. In fact, Biden kept all the tariffs that the first Trump administration imposed.

When we look at the Supreme Court decision, it is more about how tariffs were announced, not the mechanics of trade litigation and tariffs.

The risk of a repayment of collected tariffs exists, but the timeline is long, the effective amount is likely much smaller than $200 billion, and the U.S. economy can easily absorb it. In fact, the outcome of the Supreme Court decision may be no change at all in the existing trade deals.

The mainstream consensus has written extensively complaining about Trump’s tariffs. However, I have read nothing about the EU’s CBAM (Carbon Border Adjustment Mechanism) system, which is a massive tariff scheme designed to only go up in price. The CBAM is the most protectionist scheme seen in global trade in years, hidden under the “carbon” excuse to impose a monster tax system.

Tariffs are not Trump’s invention; they are the norm in global trade. The current trade deals have proven to be positive for global trade, growth, and all parties involved. Cancelling these deals would be exceedingly negative for all exporting nations. Furthermore, a global 10% tariff under Section 122 could yield $300–400 billion per year, compared with the current customs revenue of over $200 billion in 2025 and $77 billion in 2024.

Countries that have signed trade deals with the U.S. should know better than to break the existing agreements, as the new tariffs post-Supreme Court ruling would rise, and no new administration would change that, as happened with Biden.

The Supreme Court ruled the specific use of emergency powers (IEEPA) to impose certain tariffs unlawful but did not issue an order to refund collected duties.

The ruling creates a pathway for challenges, according to trade lawyers, but it does not mean the government must return every dollar. There is a huge difference between finding that a measure was unlawful and an enforceable ruling for every affected importer to receive a refund. 

Only exporters that preserved their rights, including protests, suspensions of liquidation, and timely filings, can realistically claim refunds. Most businesses will likely choose not to litigate. Furthermore, most of the value chain has already absorbed the cost of tariffs, providing little incentive for them to fight. 

Only a small fraction of companies pursued claims in previous trade disputes, and an even smaller group recovered the full amount of what they had paid. This is not a universal tax rebate. It is a complex, legally intensive process that many companies have already missed the window to access.

There is an enormous difference between the total amount of tariffs collected, around $200bn, the legally claimable and filed amounts, and the refunds after litigation, settlements, and denials.

For exporters, attempting to claim the collected duties could be a daunting legal challenge and a risky business decision, as it could result in losses exceeding their claims.

Cases will now go back to the Court of International Trade and lower courts. Each claim must be processed, argued, and decided, and there will be appeals. Trade and customs disputes can take years. What some banks treat as a headline figure ($200 billion refund) is likely to end as a much smaller, probably nonexistent, netted-out fiscal cost. Furthermore, many of these businesses will likely face the risk of losing access to the lucrative US market during the lengthy and complex litigation process.

Even if the net refund were $100–150 billion, divided over three to five years, it would average $20–50 billion annually. Insignificant in budget terms. 

At more than $30 trillion in GDP, even a $150 billion refund amounts to barely 0.5% of the US output. Furthermore, the imposition of a 10% global tariff would generate more than $300 billion per year, according to estimates, which is 50% larger than the amount claimed by headlines as a possible refund.

Meanwhile, the US economy is strengthening, with fourth-quarter private sector GDP rising 2.4% thanks to robust consumption and investment, while government spending is falling, which deducts a percentage point from GDP but is a policy decision to control debt and deficits; inflation is declining and job creation is accelerating, with the manufacturing sector in expansion.

Investors may fear legal uncertainty around trade policy, but not a one‑time refund. For all the talk of a $200 billion black hole, the true risk is a prolonged period of legal wrangling, shifting tariff measures, and noise in trade data, not a fiscal cliff. That is why I believe that trade partners will prefer to maintain existing deals rather than to enter a long and painful litigation process that may end with a higher tariff bill for exporters.