The wait for a tariff ruling could signal a Trump win - or a refund headache

By Victor Reklaitis

Supreme Court justices may be taking time to address the issue of tariff refunds

The much-awaited ruling on President Donald Trump's tariffs was not among the opinions issued on Wednesday by the Supreme Court.

The likelihood of the Supreme Court ruling in favor of President Donald Trump in a closely watched tariff case increased moderately Wednesday after the court again held off on releasing its decision.

The high court has indicated it is acting in an expedited manner in this case, which has massive economic stakes, but the justices don't typically give hints about exactly when a particular opinion will be issued.

Investors, importers and others who had braced for a ruling on Wednesday morning were left disappointed, just as they were last Friday.

Some analysts have said it's a good omen for Trump if the Supreme Court keeps holding off on releasing its decision. It's possible that there is significant debate among the justices, rather than a widespread view that lower courts were right to rule in favor of the importers challenging a wide swath of Trump's tariffs.

"We agree that a long wait for the tariff decision is probably a better sign for the Trump administration than it is for importers, but it is no guarantee of the outcome," said Kelsey Christensen, a trade attorney at law firm Clark Hill, in an email to MarketWatch on Wednesday. She added that court watchers are "not in long-wait territory yet," given the court's track record and the fact that it heard oral arguments in the case just two months ago.

"November to January is lightning speed for the court to hear and publish a major opinion," Christensen said. "As the wait continues, we suspect that the justices are navigating and fine-tuning a majority opinion in addition to one or more dissents or concurrences."

One betting market, Kalshi, recently was putting the likelihood of a Trump win in the tariff case at 35%, up from as low as 22% just before the Supreme Court issued its opinions for the day without releasing one that addressed the president's import taxes. Polymarket was putting Trump's chance for a victory at 33%, up from a low around 21% on Wednesday morning.

It's possible Chief Justice John Roberts and his colleagues are taking time to address the issue of tariff refunds, according to Terence Lau, dean of Syracuse University's law school and a former trade attorney for Ford Motor Co. (F). Analysts have been anticipating scenarios in which the court rules against Trump's tariffs and calls for big refunds to importers, along with outcomes in which refunds aren't required.

"The longer wait suggests the justices are debating the scope of the remedy," Lau told MarketWatch. "For example, they may be trying to find a middle ground, perhaps invalidating the tariffs but limiting refunds to 'prospective relief' only, not to past tariffs collected. The longer the tariffs remain in place, the more catastrophic a retroactive refund becomes for the U.S. Treasury."

Lau also said he's expecting multiple opinions in this case, with potentially "a very bare majority opinion with some justices only joining some parts of the majority."

The Supreme Court, which has a 6-3 conservative majority, is weighing in after lower courts last year found that Trump exceeded his authority in using the International Emergency Economic Powers Act of 1977 to justify his many country-specific tariffs. Opponents of Trump's IEEPA-based tariffs have emphasized that the law doesn't explicitly mention tariffs in its text, and that no president has ever used IEEPA to impose tariffs.

Trump has defended his IEEPA tariffs repeatedly and claimed that the U.S. economy would be hurt significantly if the Supreme Court were to strike them down. He reiterated that stance in a social-media post on Monday, while voicing concerns about the potential for tariff refunds.

"It would be a complete mess, and almost impossible for our Country to pay," Trump said in part.

Analysts have said the issue of refunds is crucial for the bond market BX:TMUBMUSD10Y, noting that rating agency S&P maintained its rating for U.S. sovereign debt with a stable outlook in part because of incoming tariff revenue.

Trump administration officials have indicated they're ready to maintain their tariffs through other avenues, such as by invoking authorities granted in sections 301 and 122 of the Trade Act of 1974, as well as Section 232 of the Trade Expansion Act of 1962.

-Victor Reklaitis

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