What the Supreme Court Oral Arguments Mean for Tariff Payers and Tariff Refund Claim Buyers

The Supreme Court has heard oral argument in a case to determine whether the Trump administration’s sweeping tariff regime, imposed under the International Emergency Economic Powers Act (IEEPA), is lawful. In August, the U.S. Court of Appeals for the Federal Circuit affirmed the Court of International Trade’s decision invalidating the tariffs. The Federal Circuit reasoned that the tariffs are unlawful based on both straightforward statutory interpretation and the major questions doctrine, which disfavors executive branch policies that trigger outsized economic implications without express congressional authorization.

Summary of Oral Argument

During the oral argument, the Supreme Court focused on several key issues, including statutory interpretation, the major questions doctrine and the related nondelegation doctrine.^[1] Questioning suggests that Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh seem to support the Trump administration’s position, while Justices Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson seemed to side with the plaintiffs challenging the IEEPA tariffs. It was less clear how Chief Justice Roberts and Justices Neil Gorsuch and Amy Coney Barrett would vote.

If the Court strikes down the IEEPA tariffs, it will likely rely on the major questions doctrine. Chief Justice Roberts suggested that the major questions doctrine might be directly applicable in this case and voiced skepticism about the government’s arguments that the doctrine does not apply. He noted that IEEPA has never been used to justify tariffs and observed that the authority relied upon was novel. Justice Gorsuch indicated that he didn’t think the tariff opponents could win unless the major questions doctrine applied, and pointedly raised constitutional nondelegation concerns about the scope of the government’s position, though it was not clear whether he would ultimately find that either doctrine controlled in this case.

Open Questions

While we now have a better sense of how most of the justices are likely to vote and what the basis might be if the Court does strike down the tariffs, there are still important unanswered questions. The Court could issue its decision sometime this year or as late as summer 2026. If the tariffs are struck down in whole or in part, it remains unclear how refund eligibility would be determined and how long the whole process would take. As noted in our previous article, there is precedent suggesting that parties may need to file their own judicial challenges to be eligible for tariff reimbursement.

Media and Betting Market Reactions

Media reactions to the oral arguments generally agreed that most of the justices seemed skeptical of the government’s arguments that IEEPA authorized the executive to impose tariffs. According to the Wall Street Journal’s live blog of the case, “President Trump's global tariffs appeared to be on shaky ground.” Bloomberg’s Erik Larsen observed that “[k]ey conservative justices expressed skepticism about the tariffs.” In Politico’s coverage, the conservative and liberal justices “sharply questioned” the administration’s use of emergency power, “casting doubt on the future of one of [its] signature economic policies.”

Betting markets seemed to arrive at similar conclusions. One Polymarket contract asks whether the “Supreme Court rules in favor of Trump's tariffs?” This contract predicted the odds of a Trump victory to be as high as 47% the day before oral arguments. Those odds fell to as low as 18% the day of the arguments. The cost of buying a contract on PredictIt that asks “Will SCOTUS strike down Trump tariffs?” rose from a closing price of $0.62 the day before oral arguments, to as high as $0.93 the day of.

Implications for Tariff Payers

• Keep Paying Tariffs and Keep Good Records: Unless and until the Supreme Court decides otherwise, the IEEPA tariffs will remain in place. As we wrote in September, companies that import goods should continue paying tariffs and keep detailed records of their imports and payments. Good recordkeeping is especially important now, given that an importer’s ability to claim a tariff refund in the future (or sell refund claims now) will likely depend on its ability to produce complete and accurate records of the tariffs they have paid. As we also noted in September, companies should continue to keep in mind enhanced compliance risks given the government’s focus on underpayment or nonpayment of IEEPA and non-IEEPA-based tariffs.
• Higher Claim Prices? Tariff claim prices may increase in response to the perception that the oral arguments went well for the parties challenging the tariffs. Prior to oral argument, claims based on reciprocal tariffs were generally trading significantly higher than tariffs that were aimed at curbing fentanyl imports. The government only mentioned fentanyl three times during oral arguments, and none of the justices asked questions seeking to distinguish between reciprocal tariffs and fentanyl-based tariffs. If the market believes that fentanyl tariffs and reciprocal tariffs are not legally distinguishable, the pricing for fentanyl-based tariff claims may begin to converge with reciprocal tariff claim prices. Importers exploring selling their refund claims should solicit bids from multiple buyers, if possible. If they have received a bid from a prospective buyer but have not accepted it yet, they may wish to ask the buyer to refresh their bid upward based on the market’s response to the oral arguments.
• More Sophisticated Buyers: Since the market for buying IEEPA tariff refund claims first emerged this summer, claim purchasers have had time to close purchases. Some investment banks are acting as brokers to match sellers and buyers. The diligence process and deal documents should be better developed and more consistent throughout the market now than just a few months ago. These developments should make settlement quicker and easier, but they may also give buyers an advantage based on their experience when negotiating. Claim sellers should work with experienced advisors and counsel to ensure that they are on equal footing.&
• Monitor the Supreme Court Case and Executive Actions: If the Trump administration believes the Supreme Court will strike down the IEEPA tariffs, the administration may seek to preserve its tariff regime by invoking other statutory authorities. Such changes could affect which goods are subject to tariffs and at what rates. If tariffs are eventually refunded, claim holders will need to closely monitor and comply with applicable deadlines and other administrative requirements.

Implications for Tariff Refund Claim Buyers

• More Time: Leading up to oral arguments, many claim buyers rushed to complete purchases before oral arguments changed market assumptions and claim pricing. Although the exact timeline is unclear, claim buyers that want to participate in the market should have time to buy and settle claim purchases before the Supreme Court decides the fate of the IEEPA tariffs.
• More Sellers? Although some claim holders have already sold claims, renewed media attention and potentially higher claim prices could bring more sellers into the market. The standardization of diligencing, documenting and settling claim purchases may also make it more enticing for holders of tariff claims to sell.

^[1] The nondelegation doctrine is the principle that Congress may not delegate its legislative authority to other branches of the government unless it provides an “intelligible principle” to govern and guide its delegation of such authority. See J. W. Hampton, Jr. & Co. v. United States