Trump prepares alternative tariff plan before Supreme Court ruling

(Bloomberg) — President Donald Trump’s government is working behind the scenes to find alternatives if the Supreme Court overturns one of its main legal bases for imposing tariffs, seeking to replace them as quickly as possible.

Both the Commerce Department and the Office of the US Trade Representative have considered alternatives if the Court rules against the government, according to US officials familiar with the matter. Among the options are Section 301 and Section 122 of the Trade Act, which give the president unilateral power to impose tariffs.

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The alternatives come with risks — they are often slower or more limited than the broad powers Trump has used so far, and they can also face legal challenges of their own. Still, the government remains hopeful of winning the case. Trump has repeatedly called on judges to maintain his country-by-country tariffs, which were imposed based on a supposed economic emergency.

Still, the preparations are the latest sign that the administration expects a possible setback, after the Court showed skepticism during this month’s hearings on Trump’s global tariffs. They also reveal the president’s commitment to maintaining trade tariffs, including through untested means. A member of the administration, on condition of anonymity, said that tariffs will remain a central part of Trump’s economic agenda regardless of the Court’s decision.

“We’re waiting for a decision. We hope it’s a good one, but if it’s not, we’ll find a way — we always find ways out,” Trump said on Wednesday.

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The White House did not comment on details of the preparations, but acknowledged that it is looking for “new ways” to maintain its trade policy.

“President Trump lawfully exercised the emergency tariff powers granted to the Executive Branch by Congress, and the Administration is confident of a final victory at the Supreme Court. The Administration is always evaluating new ways to address the historic U.S. goods trade deficit and bring back manufacturing essential to our national and economic security,” said spokesman Kush Desai.

It is unclear when the Supreme Court will issue its ruling. Judges can maintain the tariffs, strike them down completely or take a middle path. The decision should generate even more uncertainty for foreign companies and governments.

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“My expectation is that they will move immediately to reinstate them,” said Scott Lincicome, vice president of general economics at the Cato Institute, referring to Trump’s team. “They’re basically going to reassemble everything.”

The Supreme Court case revolves around Trump’s use of the International Emergency Economic Powers Act (IEEPA), under which he imposed “reciprocal” tariffs on imports from around the world, as well as fentanyl-related surcharges on Chinese, Canadian and Mexican goods and a tariff on products from Brazil in an unsuccessful attempt to block the prosecution of former president and ally Jair Bolsonaro.

The total effective tariff on U.S. imports is about 14.4%, and more than half of that is due to tariffs imposed via IEEPA, according to Bloomberg Economics estimates. Economists “expect most tariffs to be completely replaced” if the Supreme Court strikes down country-by-country tariffs.

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In some cases, contingency plans are already underway. Trump, for example, opened a Section 301 investigation against Brazil and has maintained Section 301 tariffs on some Chinese products since his first term. This provision generally requires a lengthy investigation before tariffs are implemented.

The director of the National Economic Council, Kevin Hassett, has already stated that Trump could use Sections 301 or 122 to reimpose tariffs if the Supreme Court rules against the government.

“There are many things we can do to replicate current policies using alternative authorities,” Hassett said in a Nov. 13 interview with Bloomberg host and Carlyle Group co-founder David Rubenstein at an Economic Club of Washington event.

Section 122 would allow the president to impose tariffs of up to 15% — a percentage used by Trump in several agreements — but only for up to 150 days. Commercial advisor Peter Navarro previously cited this limit as a reason for the government not to rely too heavily on this measure.

Trump also used Section 232 of the Trade Expansion Act to impose tariffs on sectors such as metals and automobiles. The government announced new investigations and new tariffs. Furthermore, the steady advancement of finished products covered by these tariffs has angered some trading partners, especially in Europe, who say it violates the sectoral tariff cap under the U.S.–European Union trade agreement.

“I’m starting to wonder if this is part of the administration’s Plan B if IEEPA is ruled unconstitutional,” former trade negotiator Wendy Cutler wrote on social media last month. “It’s only a matter of time before 232 tariffs cover most of our industrial base.”

Section 338 of the Tariff Act is another potential tool for Trump, but one that would likely open up a new legal battle as it has never been used before.

“It would probably be challenged in court very quickly,” Lincicome said. “I am cautiously optimistic that we will avoid a return to the chaos of 2025.”

Still, the new measures will not be so simple to implement, given their limitations. Authorities would have to deal with unprecedented legal issues, such as the possibility of imposing Section 122 fees simultaneously, canceling them early and reimposing them under a new period, or even applying retroactive fees to try to avoid refunding amounts already collected.

“It would be a big mess,” Lincicome said.

A contrary decision could force the government to return more than US$88 billion in fees already collected, according to Bloomberg Economics.

White House deputy chief of staff James Blair said he believed in a “50% chance or more” of the government’s victory. But if that doesn’t happen, authorities would essentially reinstate any canceled tariffs.

“There are tools that the president already has in existing powers to put everything back together by other means,” Blair said at a Bloomberg Government event on Nov. 18. “Let’s see what they decide.”

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