Supreme Court Skips Tariff Ruling

Update (1004ET): The USSC did not rule on tariffs Monday, instead issuing a ruling on Bowe vs. United States - concerning whether federal prisoners can ask the Supreme Court to review their sentences. The case was sent back to a lower court.

And so, we wait. Wednesday is scheduled for the next round of opinions.

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The US Supreme Court may rule today on the legality of President Trump's sweeping global tariffs, marking a major test of presidential powers. Specifically, the Court is considering whether Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) - which constitute about half of the tariffs we've seen under Trump.

As we noted yesterday, the court never says in advance which decisions are ready for release, only that rulings in argued cases are possible when the justices take the bench at 10:00 a.m. Washington time. That said, a tariff decision is a possibility given the court’s expedited handling of the case so far.

Trump invoked IEEPA to impose his 'reciprocal' tariffs on nearly every foreign trade partner to address what he called a national emergency over US trade deficits. He invoked it again to impose tariffs on China, Canada and Mexico over fentanyl trafficking into the United States. 

During arguments on Nov. 5, the court seemed skeptical over Trump's authority to use IEEPA, leading most observers observers, including betting markets, to conclude a high probability they're struck down at least in part. The Trump administration is appealing lower court rulings that he overstepped his authority, while Trump himself said a Supreme Court ruling against the tariffs would be a "terrible blow" to the United States.

That said, even if that happens, the Trump administration has several other legal avenues they can pursue. As Deutsche Bank notes; 

For instance, the sectoral tariffs (e.g. on steel and aluminum) aren’t covered by the court ruling, whilst another option would be to use Section 122 of the 1974 Trade Act, which permits temporary 15% tariffs for 150 days. 

 And Goldman:

This won’t be the end of tariffs… the administration will almost certainly roll out alternative legal frameworks. Net result is probably slightly fewer tariffs, materially more trade uncertainty, and some incremental deficit concerns. Net-net, that’s mildly supportive for equities and mildly negative for bonds… but largely priced for both.

The cases under consideration by the Supremes were brought by businesses affected by the tariffs and 12 mostly blue US states. 

The opinions will be available here.

Customs Gets Ready

In anticipation of a ruling against the tariffs, US Customs has set a new deadline for US importers to file for electronic refunds: February 6th.

The agency also published details of a new process on Jan. 2, which was established as part of a March 24 Trump executive order on modernizing government payments and phasing out physical checks, CNBC reports.

The new digital Customs system is called ACE (Automated Commercial Environment), a secure electronic portal allowing businesses to file import/export data, manage trade information, and comply with regulations. ACE will manage the ACH refunds.

Prior to this, importers had to manually set up an account in the ACH network with Customs to pay duties or receive funds by email. Once that email was received by Customs, someone in the agency had to enter the data and then confirm the account had been set up, according to Lori Mullins, director of operations at Rogers & Brown Custom Brokers.

The Court is also considering cases involving the 1965 Voting Rights Act, and a Colorado law banning psychotherapists from conducting "conversion therapy" to try and un-gay a child.