Will SCOTUS stop Trump?
While Trump has been making extensive use of his authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), this authority has been challenged in court. Lower courts have ruled that Trump has exceeded his authority as the executive.
Oral arguments before the Supreme Court begin on November 5, 2025 in Learning Resources vs. Trump, a case that will force the Court to opine on whether or not Trump has the right to use tariffs in the way that he has been.
The plaintiff is an educational toy company backed by a coalition of legal scholars and foundations. They contend that Trump is exceeding his authority in multiple ways.
Their arguments center on which branch of government the Constitution empowers to impose tariffs—and thus to levy taxes and direct trade policy—the executive or Congress.
The stakes are quite high, and a wide range of decisions is possible. Trump could win entirely, giving him (and future Presidents) broad latitude to deploy tariffs as an instrument of foreign policy.
Trump could also find his authority to impose tariffs significantly restricted, forcing him to seek Congressional approval. Other middle ground outcomes are possible.
There has been some speculation that the Court could even force the federal government to reimburse companies that have paid tariffs. This would create a substantial financial burden on the government, given the $30 to $40 billion of tariff revenue now being generated every month.
For various reasons, we do not believe the Court will go to this extreme length (if it even decides to restrict the White House from imposing tariffs at all). But it is hypothetically possible.
The Court is not expected to render its decision until mid-2026. Many conflicting legal doctrines are relevant to this case, and there does not appear to be a strong consensus on where the Court will land.
The administration’s goals
In the meantime, investors should continue to expect Trump to use tariffs, or at least the threat of tariffs, as he has been.
But investors should also understand, if they do not by now, that Trump’s intention is to shape the behavior of other countries and collect some much-needed revenue for the Treasury.
As we discussed last week in Tariff Dividends: A Capitalist Solution to a Big Political Problem, this revenue can even be returned to the American people in a manner that helps neutralize the cost of tariffs to consumers, especially less affluent ones.
Trump’s goal, of course, is not to destabilize markets or hurt economic growth.
At some level, from an investment perspective, it perhaps comes down to confidence in Trump’s decision-making and his ability to balance market instability with policy objectives.
Investors who de-risked in April, assuming he would make a massive policy mistake, have paid a high price. The S&P 500 has advanced more than 30% since bottoming on April 8.
Investors who dumped stocks on Friday were likewise punished in the form of missed opportunity, albeit on a much smaller scale.
Our suggestion to investors is to pay careful attention to Trump’s words—not media accounts of them—and to stay anchored to the big picture objectives of the administration, like strong economic growth, technological advancement and geopolitical stability.
What the administration accomplished in the Middle East today can reasonably be described as a foreign policy miracle. When it comes to the Trump White House, the process may be messy and unusual, but the outcomes are what is most important.
