Supreme Court Blocks IEEPA Tariffs as Scott Bessent Says $175 Billion May Never Reach Americans
The Supreme Court of the United States has ruled that President Donald Trump could not rely on the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on trading partners, casting uncertainty over roughly $175 billion collected under the policy.
Supreme Court halts IEEPA tariffs as Scott Bessent signals $175B in disputed revenue may never reach Americans amid ongoing legal battles.
While few families were counting on a rebate check tied to tariff collections, the prospect now appears even more remote. With economists estimating that up to $175 billion is tied up in litigation over potential refunds, Treasury Secretary Scott Bessent indicated the funds may never make their way back to consumers.
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Legal Dispute Over Tariff Revenue
The ruling determined that the White House’s use of IEEPA authority to introduce global tariffs was unlawful. Tariffs were first applied to China in February 2025, followed by Canada and Mexico a month later. April’s “Liberation Day” measures were also enacted under IEEPA.
Although the administration is exploring alternative legal pathways to continue tariff collection, the revenue already gathered under IEEPA remains contested. Optimists argue that refunds to U.S. importers could act as a short-term economic boost. If businesses passed the funds along, consumers might benefit through lower prices.
However, speaking at the Economic Club of Dallas, Bessent cautioned that the Supreme Court did not specify how the disputed money should be handled. That question now falls to international trade courts.
“My sense is that could be dragged out for weeks, months, years,” he said, adding that while alternative authorities such as Section 232 or Section 301 would maintain tariff flows, “I got a feeling the American people won’t see it.”
U.S. Trade Representative Jamieson Greer echoed that stance during an appearance on Fox News Sunday, stating that the courts would ultimately determine whether compensation or refunds proceed.
How Much Is at Stake?
The precise amount subject to refund remains debated. IEEPA-generated funds must be separated from duties collected under other agreements and authorities.
The Penn Wharton Budget Model estimates potential refunds of up to $175 billion, reflecting about $164.7 billion in cumulative IEEPA collections by January 2026. Collections have been running at roughly $500 million per day.
Paul Donovan of UBS warned clients that expectations of lower prices may be misplaced. He noted that any rebates would go to U.S. importers—the entities that made payments to the Treasury—and with new tariffs forthcoming, businesses are unlikely to rush price reductions. He added that refunds would widen the fiscal deficit while acting as a form of stimulus.
Lower Effective Tariff Rates Ahead?
Immediately after the decision, the administration confirmed it would enforce a 15% tariff rate under Section 122 of the Trade Act of 1974 for up to 150 days, buying time to establish a longer-term framework.
Over time, however, analysts suggest the overall effective tariff rate may trend lower. The Yale Budget Lab reported that without IEEPA tariffs, the average effective rate would stand at 9.1%—the highest since 1946, excluding 2025. Had IEEPA measures remained in place, the rate would have reached 16.9%.
Strategists at Deutsche Bank, including Jim Reid, expect further declines in 2026. Since October, average customs duties have already dropped by about two percentage points to roughly 11%, driven by exemptions and carve-outs. Analysts also pointed to domestic political constraints following weak local election results in early November.
For now, the fate of up to $175 billion remains unresolved, with legal proceedings likely to determine whether those funds ever return to the American public.
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