Investors brace for refund wave and rising yields as Trump’s emergency tariff powers face legal test
A single Supreme Court decision could send US$150bn–US$200bn back to US importers and push Treasury yields higher at the same time – a combination that matters directly for portfolios exposed to US equities, credit and rates.
According to Reuters, the Court will decide whether US President Donald Trump legally used the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without Congress, and whether importers can claim roughly US$150bn in refunds if he loses.
CNBC reports that justices from both conservative and liberal wings signalled scepticism in November arguments, and prediction markets now put the odds of the current tariff regime being upheld at only about 28–30 percent.
For equities, the near‑term setup is asymmetric.
Reuters said that a ruling requiring refunds could deliver US$150bn–US$200bn of cash back to import‑heavy companies over the coming months, with strategists flagging retail, consumer goods and electronics as likely winners if they both recover past duties and see lower input costs going forward.
Some managers are already adding to small caps on the view that tariff relief on top of supportive Federal Reserve policy would act, in one adviser’s words to Reuters, “like putting rocket fuel on a fire.”
The rates and fiscal side cuts the other way.
CNBC reported that tariffs brought in about US$195bn in fiscal 2025 and US$62bn in 2026, while Reuters said IEEPA‑linked duties alone have generated about US$133.5bn and are “approaching US$150bn.”
JPMorgan estimates that annualized tariff revenue could fall from around US$350bn to US$250bn if the administration shifts to alternative, lower‑rate legal authorities.
Strategists told Reuters that a refund order and lower tariff inflows could mean more US Treasury issuance and upward pressure on yields – a headwind for risk assets even if specific sectors get a windfall.
Policy risk likely does not end with this case.
Reuters reported that Nomura’s chief economist for developed markets sees up to five other legal avenues Trump could use, some allowing tariffs of up to 15 percent, and expects that by the end of 2026 the tariff structure could “look almost exactly the same as what is there” even if IEEPA is struck down.
According to CNBC, US Treasury Secretary Scott Bessent has also stressed that the administration has multiple back‑up tools under the 1962 Trade Act.
He said “our ability to continue collecting tariffs at roughly the same level” is not in doubt, even if the president loses flexibility to use them as a national security or bargaining lever.
On the ground, companies are already lawyering up and trading claims.
Reuters reported that Costco, Bumble Bee Foods, Revlon, EssilorLuxottica, Kawasaki and Yokohama Tire have filed pre‑emptive suits against US Customs and Border Protection to preserve their refund rights.
Some smaller firms are instead selling potential claims to hedge funds at steep discounts.
One toy company told Reuters it received 23 cents on the dollar for “reciprocal” tariff claims and nine cents for those tied to fentanyl‑related duties.
Trade advisers quoted by Reuters say firms that can document payments and file early are most likely to see money first, but they still warn it “could be years” before many claimants get paid.
