Multiple Legal Paths to Keep Tariffs Alive

Treasury Secretary Scott Bessent isn't losing sleep over the Supreme Court case challenging the Trump administration's tariff policies. Speaking at The New York Times DealBook Summit on Wednesday, he made it clear that even if the administration loses the case, the tariff structure isn't going anywhere.

The reason? Alternative legal pathways. Bessent pointed to various sections of the 1962 Trade Act that give the president broad authority over import duties. "We can recreate the exact tariff structure with [sections] 301, with 232, with 122," Bessent explained. When pressed on whether these measures would be permanent, he said the 122s are "permanent," while the other sections could be implemented "permanently."

Bessent's argument is essentially that losing the Supreme Court case would be more of a procedural inconvenience than a policy defeat. He stressed that tariffs are meant as a temporary tool anyway, with the ultimate goal being to rebalance trade and restore domestic production. Still, he remains "optimistic" about the Supreme Court's eventual decision.

Crediting Tariffs for Progress on Fentanyl

Beyond the legal maneuvering, Bessent highlighted what he sees as tangible wins from the tariff strategy, particularly when it comes to China. He credited tariffs on fentanyl for pushing China to take significant steps toward stopping the drug's import into the U.S., framing this as evidence that the policy is working despite ongoing tensions between the two countries.

He also addressed Costco Wholesale (COST)'s recent lawsuit against the Trump administration seeking a complete refund of tariffs paid. Bessent questioned the premise rhetorically: "Okay, tell me what kind of refund Costco is due?"

The Legal Backup Plan

Chief Equity Strategist Jeff Buchbinder echoed Bessent's confidence, noting that even if the Supreme Court upholds a ruling against the tariffs, the administration has alternative legal routes. The most likely path involves using Section 122 to impose temporary 150-day tariffs tied to large trade deficits, which would buy time for the U.S. Trade Representative to conduct investigations needed for longer-term Section 301 tariffs targeting unfair trade practices.

President Donald Trump had expressed concern back in October, stating that the U.S. would be "struggling for years" if the Supreme Court struck down the tariffs. Meanwhile, economist Peter Schiff has suggested that a ruling against the tariffs could actually provide Trump with a convenient scapegoat for any economic downturns.

The Supreme Court has already signaled skepticism about the tariffs' legal foundation, with justices questioning the president's authority to impose such broad duties under the International Emergency Economic Powers Act of 1977. But if Bessent's reading of the situation is correct, the Court's ruling may not matter as much as it seems. The administration appears ready to play legal whack-a-mole, using whatever statutory authority is available to keep the tariff structure intact.