Court's IEEPA Ruling Could Reshape Tariffs and Crypto Regulations

Crypto Markets Brace for Impact as White House Prepares Tariff Alternatives Amid Supreme Court Review

The U.S. Supreme Court's upcoming decision on the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) to justify tariffs has sent ripples through financial markets, with crypto traders pricing in a 24% chance the court will uphold the president's emergency powers. Meanwhile, the White House is preparing contingency plans to maintain its protectionist trade stance should the court strike down the IEEPA-based tariffs, a move that could reshape global commerce and regulatory uncertainty for businesses and investors alike.

The IEEPA, a 1970s-era law allowing presidents to declare national emergencies, has been the linchpin of Trump's aggressive tariff strategy, accounting for over half of the current 14.4% average tariff rate on U.S. imports. However, lower courts have already ruled these tariffs unlawful, and justices expressed skepticism during November oral arguments, with several highlighting the constitutional question of whether Congress can delegate taxing authority to the executive branch. If invalidated, the administration could face a $88 billion refund liability and must pivot to narrower legal tools like Sections 232, 301, or 122 of the Trade Act, which require detailed investigations and congressional oversight.

While these alternatives are legally defensible, they come with limitations. Sections 232 and 301, which target national security and unfair trade practices, demand lengthy investigations and risk trade disputes with allies. Section 122, permitting a 15% tariff, expires after 150 days without congressional approval. PIMCO analysts note that the administration could still rebuild tariffs through these frameworks, potentially restoring the effective rate to 10% or higher, but the process would introduce short-term uncertainty and complicate business planning.

The crypto sector, meanwhile, is bracing for regulatory shifts as the White House reviews Treasury's proposed rules to join the global Crypto-Asset Reporting Framework (CARF). The framework, already adopted by G7 nations and crypto hubs like Singapore, would enable the IRS to access Americans' foreign crypto account data, curbing offshore tax evasion. While Trump's advisors support the move, crypto advocates argue it could stifle innovation by imposing burdens on decentralized projects. Over 65 crypto organizations recently urged the White House to exempt decentralized software developers from prosecution and clarify tax rules for DeFi platforms.

The interplay between trade and crypto policies underscores broader regulatory risks. A Supreme Court ruling against IEEPA could delay tariff refunds, prolonging economic uncertainty and potentially influencing the Federal Reserve's rate-cut timeline. Meanwhile, crypto markets are reacting to the administration's dual focus on tariffs and digital asset oversight, with investors weighing the implications of heightened regulatory scrutiny. As the court's decision looms, businesses and investors face a landscape where policy shifts in one domain-tariffs or crypto-could reverberate across global markets.