Tariffs’ day in court brings up a familiar feeling: uncertainty

A Supreme Court hearing on the legality of some tariffs imposed by President Donald Trump has raised new questions about the future of U.S. trade policy, evoking uncertainty that has plagued the economy this year.

The Supreme Court on Wednesday heard oral arguments in a lawsuit seeking to overturn some import taxes imposed by President Donald Trump. Both liberal and conservative justices have investigated the administration’s arguments for imposing the tariffs, leading some legal experts to feel the justices are leaning toward striking down at least some of Trump’s tariffs.

If the justices decide to eliminate the tariffs, it could have a significant, if unpredictable, impact on the economy.

The key questions will be whether the court will invalidate all or just some of the tariffs imposed under the emergency orders; Whether the Supreme Court will ask a lower court to decide any of the issues raised; What other tariffs might Trump impose as a “Plan B” and whether the government will have to repay the billions in tariffs it has already collected.

“It looks to me like this could be a mess,” Judge Amy Coney Barrett said at the hearing.

Stocks initially rose Wednesday during the hearing as justices expressed doubts about the legality of the tariffs, which have caused confusion and raised costs for many companies.

Eliminating the tariffs would immediately reduce those costs and ultimately push down prices for consumers, said Rodney Lake, vice dean of undergraduate programs and director of the GW Investment Institute at George Washington University’s GW Business School.

However, lowering import taxes would simultaneously create some problems for business leaders planning capital expenditures. Planning for major business expansions takes years, and not knowing what the business policy will be can complicate decisions about when and where to build production facilities and establish supply chains, for example.

“It creates uncertainty, which is generally negative for the economy,” Lake said.

“Uncertainty” has been a familiar theme in the economy this year, with Trump raising, eliminating and creating tariff exemptions in quick succession. Business leaders said in surveys that uncertainty over trade policy has discouraged them from hiring, a major reason the labor market has slowed significantly in recent months.

However, many companies have adapted to the uncertainty and managed to overcome the difficulties, Lake said. Apple, for example, saw its stock value rebound after falling in April amid concerns that tariffs on China would push up the prices of iPhones made there. The company quickly responded to China’s high tariffs by moving production to India, among other steps to mitigate the damage.

“I think people probably underestimate that great companies and great management teams figure out ways to navigate these waters, whatever the politics,” Lake said.