Treasury Secretary Scott Bessent warned of potential consequences if the Supreme Court rules against the administration, despite expressing confidence over the Trump Administration’s appeal to the higher court.
Tariff Refund "Terrible” For Treasury"
On Sunday, Bessent appeared on NBC News’s “Meet the Press” and discussed the Trump administration’s appeal to the Supreme Court to overturn a decision against its tariffs. "We would have to give a refund on about half the tariffs,” a situation Bessent described as “terrible for the Treasury”.
Bessent defended Trump’s tariff policy despite possible setbacks, arguing that tariffs do not act as a tax on Americans and highlighting other signs of economic strength, pointing to the second quarter GDP growth and the recent stock market performance.
Backup Plan May Keep Trump Tariffs Despite Court Ruling
The Trump administration is facing a crucial moment with its tariff policy. The administration reportedly has a “backup plan” that could keep the tariffs in place, regardless of the Supreme Court’s decision. This plan could have significant implications for the U.S. economy and global trade. According to Chief Equity Strategist Jeff Buchbinder‘s analysis, the administration could invoke Section 122 of the Trade Act and Section 301 instead.
Thomas Ryan, Economist-North America, at Capital Economics, stated that it's likely the administration would expand tariffs that were imposed under a different legal basis to offset lost IEEPA tariff revenue, "maintaining an effective rate of at least 10% and limiting the size of any stimulus," reported Fortune.
Bessent reiterated that even in case of an unfavorable ruling from the Supreme Court, there are “numerous other avenues” to continue imposing tariffs. However, he conceded that these alternatives would weaken Trump’s negotiating position.
Experts Signal Crisis If Tariff Losses Raise Deficit Further
The U.S. has amassed “$158 billion in total tariff revenue so far this year. If the administration loses the tariffs being challenged in court, the “effective tariff rate” would fall to around 8% from 17%, causing an increase in the federal budget deficit. cautioned Ryan.
Earlier, President Donald Trump had expressed his concerns about the potential economic consequences if the Supreme Court rules against his tariff policy. He warned of an "economic emergency" and a significant impact on the stock market if the ruling does not go in his favor.
SPDR S&P 500 ETF (NYSE:SPY) and Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) climbed 10.71% and 12.90%, respectively, on a year-to-date basis, as per Benzinga Pro.
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