The US is facing a potential $2 trillion payout to foreign partners if the Supreme Court rules against President Donald Trump’s use of emergency powers to impose tariffs. Trump introduced the tariffs in April, citing unfair trade imbalances with US partners and invoking the 1977 International Emergency Economic Powers Act (IEEPA) as the basis for his actions. The IEEPA allows the president to regulate international trade and financial transactions during a declared national emergency involving foreign threats.

The tariffs have been met with criticism from lawmakers, who warn that they could harm the domestic economy. In a recent court ruling, the US Court of Appeals found that Trump had exceeded his authority by imposing tariffs under the IEEPA, stating that only Congress can authorize such measures. The court did not cancel the duties, pending a Supreme Court decision.

Trump has warned of dire consequences if the Supreme Court rules against him, stating that the US would have to pay back over $2 trillion in tariff revenue and investments, which he claims would be a “national security catastrophe.” However, he did not provide an explanation for the $2 trillion figure, which is significantly higher than the $100 billion in revenue generated by the tariffs so far, according to US Trade Representative Jamieson Greer.

During recent oral arguments, Supreme Court justices questioned Trump’s authority to impose tariffs under the IEEPA, which grants the president wide powers to freeze assets, impose sanctions, and restrict commerce, but makes no mention of tariffs. Some justices pointed out that the act authorizes the president to regulate imports “by means of licenses or otherwise,” which could be economically comparable to tariffs.

The Supreme Court’s decision is expected by July 2026, and legal analysts predict that it will have significant implications for US trade policy. If the court rules against Trump, it could lead to a complex process of refunding importers, as cautioned by Justice Amy Coney Barrett. The outcome of the case will be closely watched by international trade partners and will likely have significant economic and political consequences for the US.