There is an old maxim about casinos and players—the house never loses. Last week, punters who placed bets on Polymarket.com correctly predicting an invasion of Venezuela learnt that the “snatch and extract” mission doesn’t qualify as an invasion and therefore doesn’t trigger payouts. Even as the issue is being debated, punters are placing their chips predicting the outcome of tariffs case in the US Supreme Court. Only 23 percent—less than one in four—believe the court will rule in favour of Trump’s tariffs. The punters will know next week if they lost their shirts or won, and will collect their payouts.
The one-time owner of Trump Taj Mahal and many other casinos plans to continue to collect. Donald J Trump is planning on winning even if he loses the court case. The war room of the US president is ready with a parade of options—plans B to Z. Treasury Secretary Scott Bessent, effectively the quarterback of Trump’s economic war room, said, “What is not in doubt is our ability to continue collecting tariffs at roughly the same level,” even if the justices strike them down.
On January 14, the US Supreme Court is expected to rule on case No 24-1287, Learning Resources Inc & Petitioners vs Donald J Trump, President of the United States, et al. The Trump administration used the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs on imports. The IEEPA allows the US president to address declared emergencies concerning “unusual and extraordinary” threats to national security, foreign policy, or the economy, including the authority to “regulate” or “prohibit” imports. The crux: no president in the past 50 years has used the law to “impose tariffs—let alone the sweeping worldwide tariffs”.
The petition, filed by educational toymaker Learning Resources, small businesses and 12 state governments, asks “whether the IEEPA authorises the president to impose tariffs”, particularly since the US Constitution gives Congress the power to regulate foreign commerce and impose import tariffs. The importers argued the IEEPA authorises sanctions or asset freezes, not broad duties.
US courts, including a federal one that adjudicates on international trade, struck down the tariffs since the IEEPA contains no explicit statutes on them. The Trump team has argued “regulate… importation” covers imposition of duties. The courts pointed out that the major questions doctrine requires Congress to explicitly grant authority. The justices, during the hearings, raised fundamental questions on definitions and the separation of powers.
What are the possible outcomes? The best-case scenario for Trump is that the Supreme Court upholds the tariffs entirely—a jackpot that only about one in three punters on Kalshi.com is currently betting on. The worst-case outcome—and the jackpot for global exporters—is a total strike-down. Beyond the gamblers, even the legal cognoscenti—interpreting the “tell signs” from other rulings—suspect that Trump may lose. This would mean rollback of the Liberation Day tariffs and the start of a “refund crisis” for the more than $150 billion collected.
The Trump administration is prepared for the day after. It has arranged an array of three-digit codes to keep the tariff flag flying. Section 122 of the Trade Act of 1934, under a Nixon-era precedent, allows the immediate imposition of 15 percent tariff across the board while building cases under other sections. The commerce department can launch expedited investigations to tag imports in strategic sectors (steel, auto, tech) as security threats and impose tariffs under Section 232, as was done during Trump 1.0. Section 301 empowers US Trade Representative to probe country-specific practices for remedial action. Section 338 can be used on countries that discriminate against US exports. None of these afford the kind of sweeping, universal tariffs attempted under the IEEPA. Team Trump hopes the Supreme Court would weigh ramifications and pray the order would be nuanced even if the issue seems binary.
Courts often look for an off-ramp in constitutional face-offs with the executive. The queries of the justices suggest a two-pronged approach. They could invoke the major questions doctrine and rule that the power to regulate is not a power to impose tariff. However, it may choose to not pull the plug, citing risks of an economic chaos and, instead, direct the administration to seek ratification by the Congress, shifting the onus on to legislators.
There are other off-ramps cited in case laws. The court could rule that the administration used the wrong law, yet uphold the tariffs relying on the Remand Without Vacatur doctrine, which allows the executive time for housekeeping. In this scenario, the USTR would pivot to an expedited investigation, reclassifying the tariffs under the security tag. Alternatively, the court could accept the president’s power to act in a crisis, but reject the permanency of tariffs specifying a sunset clause. Beyond that, the House and the Senate must bless the trade policy.
A day after the November 5 hearings in the Supreme Court, Trump hoped for a victory and, at the same time, acknowledged the need for a backup, stating, “We’ll have to develop a game two plan.” USTR Jamieson Greer is leading the Plan B track and timelines have been drawn out. The buzz is that pre-baked or pre-filed investigations are cued up, ready to roll. Team Trump is also examining the potential of United States Reciprocal Trade Act (HR 735), which explicitly authorises the president to negotiate and impose duties on imports, to be teed up just in case.
Dwight Eisenhower once said, “Plans are worthless, but planning is everything.” Trump is set to spin the roulette again to win. After all, the house never loses! The tariff saga is far from over.
Read all columns by Shankkar Aiyar
SHANKKAR AIYAR
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)