Don't expect lower prices now that the Supreme Court has ruled against Trump's tariffs

Andrew Keshner

Consumers may face only more economic uncertainty from here

Here's what the Supreme Court's ruling on President Trump's tariffs may mean for Americans' wallets.

The Supreme Court's decision to strike down many of President Donald Trump's tariffs is a massive blow to the president's agenda. But for cost-conscious consumers, the immediate impact could be further economic uncertainty, with few price cuts in store.

Ahead of Friday's 6-3 decision that Trump lacked the power to impose his sweeping array of tariffs under the International Emergency Economic Powers Act of 1977, economic researchers as well as public-opinion surveys said consumers were paying more due to the levies.

Trump called the court's decision "deeply disappointing" at a Friday press conference. Yet he repeatedly stressed that he has the power to impose other tariffs in order to spur domestic manufacturing and jobs.

The president announced a 10% global tariff based on different authority and said he would pursue trade investigations to potentially justify additional levies. The tariffs that do remain in place are now on firm legal ground, he said, and the ruling removed unresolved legal questions. "Great certainty has been brought back to the economy of the United States, and actually the economy of the world," Trump said.

With the Trump administration poised to dial up remaining tariffs after the decision, experts say companies face too much uncertainty to cut their prices.

In other words, affordability was the watchword before the high court's decision, and it remains so.

Households were paying approximately $1,681 extra per year because of the tariffs, and that figure could now drop to an estimated $781, said Martha Gimbel, executive director and co-founder of the Yale Budget Lab.

"This ruling does not resolve economic uncertainty. If anything, it increased economic uncertainty," said Gimbel.

With the batch of new levies, households could possibly pay $1,471 annually for tariffs, according to updated Yale Budget Lab projections Friday afternoon.

Even though a swath of tariffs have been struck down, it will not translate into a price cut for consumers, she said. "What we've seen historically is when tariffs come down, if prices increase, they don't come down," Gimbel told MarketWatch.

Why is that?

Unless there's some outside push - like a new competitor - businesses will not cut prices that customers have grown accustomed to paying, she said. That's especially the case here. "Particularly if a business thinks more tariffs are coming, why would they lower them just to have to raise them again?"

The court's decision wiped out more than 60% of last year's tariffs, according to Olu Sonola, head of U.S. economics at Fitch Ratings. It roughly halved the nation's effective tariff rate and could shrink yearly tariff revenue by approximately $200 billion, he said.

It remains to be seen whether there could be price cuts in some sectors. "The decision could lower prices for goods where tariff passthrough has been meaningful - toys and the like come to mind," Sonola said, referring to sectors where companies passed on the cost of tariffs to their customers. It could also be a profit win for the companies that ate the levies, he said.

Nevertheless, he said, "tariffs are likely to return in some form, so firms may be reluctant to cut prices until there's greater certainty about where tariff rates ultimately settle. This could be a lengthy process."

The decision's big-picture impact will grow clearer in the coming weeks and months, said Andrew Siciliano, the tax partner heading up KPMG's trade and customs practice. "The impact on consumer prices will depend on how quickly businesses adjust and whether the administration pursues alternative tariff measures," he said.

But a lot remains to be seen, and the long-term impact "will hinge on how the situation evolves - and we are monitoring developments day by day."

According to S&P Global Market Intelligence, "immediate implications of tariff reversal are likely to result in retroactive refunds, not future price relief." Experts at the firm said the tariff costs for goods coming from the European Union, Japan or South Korea, or goods that fall under trade deals with Mexico and Canada, may see "little to no change in tariff treatment."

What about refunds for consumers?

Another thing that's likely to be messy and lengthy is any process of reimbursing money that companies paid to the U.S. government under the now invalid tariffs. The Supreme Court decision opened up a massive question about refunds that could be worth somewhere between $100 billion and $130 billion by one count. A different estimate found that the refunds might total $175 billion.

Trump said the Supreme Court's decision raised an immediate question about refunds - but the judges never answered it. "It's not discussed," he responded to a reporter who asked how refunds to companies could play out. "We'll end up being in court for the next five years," he said.

It's not likely that any refund money will flow back to customers, according to Gimbel. The money would likely go to businesses and importers instead. "Any tariff passed on to consumers, the consumer will have to eat," she said.

The refunds should go to consumers, said Sen. Elizabeth Warren, a Democrat from Massachusetts and fierce Trump critic. In the refund rush, "giant corporations with their armies of lawyers and lobbyists can sue for tariff refunds, then just pocket the money for themselves. It's one more example of how the game is rigged."

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02-20-26 2005ET