Bennett: If the court rules against the tariff policy, the Treasury has sufficient funds to pay refunds

The U.S. Supreme Court is set to issue a ruling on the legality of President Donald Trump's tariffs, with Friday identified as an opinion day for decisions. The court did not announce a decision on Friday, but analysts expect a ruling soon. The outcome remains uncertain, but the stakes are high for trade policy and the U.S. fiscal situation.

A potential ruling against the Trump administration could require refunds for importers who have paid the tariffs, raising concerns about the fiscal burden on the Treasury. However, Treasury Secretary Scott Bessent stated that the Treasury has sufficient funds to cover such refunds if ordered by the court. This assurance has provided some clarity amid market uncertainty.

Economic data so far has shown a muted impact from the tariffs. Inflation effects have been limited, and the U.S. trade deficit has fallen sharply. In October, the trade imbalance reached its lowest level since 2009, reflecting weaker imports rather than a surge in exports. This has reinforced the administration's argument that the tariffs are reshaping trade without harming growth.

Why the Court Ruling Matters

The Supreme Court's decision will determine whether President Trump's use of emergency powers under the International Emergency Economic Powers Act (IEEPA) to justify the tariffs was lawful. If the court rules against the administration, it could set a precedent limiting future presidents' authority to impose tariffs in such a manner. This would shift the balance of power from the executive to Congress in matters of trade policy.

For businesses, the ruling is critical. Many companies have adjusted their cost structures and supply chains in anticipation of the tariffs remaining in place. A decision requiring refunds could disrupt these strategies, potentially leading to years of processing and logistics for customs brokers.

How Markets Reacted and Analysts Are Watching

Markets have shown mixed reactions to the uncertainty surrounding the ruling. Treasury yields could rise if investors interpret the decision as a potential strain on the fiscal deficit. Morgan Stanley analysts suggest that the ruling could lead to a range of outcomes, including narrowing the scope of existing tariffs without requiring their full removal.

Polymarket currently prices the odds of the court ruling against the Trump administration at about 70%. This suggests that markets have largely priced in the possibility of a negative ruling, reducing the potential for immediate volatility. Analysts are now watching how the ruling could influence future Treasury issuance and fiscal policy.

A favorable ruling for the administration would likely provide a boost to equities, particularly in sectors affected by the tariffs. However, the bond market is expected to react more strongly, with potential implications for long-term fiscal planning.

What Investors Should Watch

Investors are advised to monitor the Treasury's response to any ruling, particularly in terms of how it manages potential refunds and issues additional debt. The economic impact of the tariffs has so far been less severe than some feared, but the long-term implications of the ruling could still shape U.S. trade policy for years.

The ruling will also have international implications, especially for countries that have entered into preliminary trade agreements with the U.S. A court decision limiting the use of emergency powers could affect how the U.S. engages in future trade negotiations.

As the Supreme Court prepares to deliver its decision, the outcome remains one of the most anticipated events in the early part of 2026. Investors, businesses, and policymakers are all watching closely for clarity on how U.S. trade policy will evolve.