Weekly Updates
Weekly Updates
- The US Supreme Court has indicated it will hear arguments about the legality of some US tariffs in November. This raises the possibility that certain tariffs could be declared unlawful during the first half of next year.
- If some tariffs are ruled unlawful, they will likely be replaced with new tariffs. The new tariffs may not replicate the current tariff, and tariff rates could thus both increase and decline, depending on the exporting country. Anyone who has paid tariffs between April 2025 and the ruling would be entitled to a refund. US Treasury Secretary Bessent suggests that half the tariff revenue could be returned. That implies 0.5% to 0.7% of GDP, which would be added to the fiscal deficit.
- Refunding tariff payments is a tax rebate. US companies that paid tariffs would receive a windfall cash payment. Approximately two thirds of tariff payments are estimated to come from smaller US companies. As with past income tax rebate cheques, returned tariffs could be a fiscal stimulus.
- With new, different tariffs as replacements, there is a possible inflation skew. If changing tariff authority lowers some tariff rates, US prices that rose with those tariffs many not fall (“price stickiness”). However, if a new tariff regime increases some tariff rates, new inflation risks emerge.
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