Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
The Supreme Court is currently reviewing the legality of President Donald Trump’s extensive tariff policies, a move that could potentially dismantle a key component of his economic agenda. Despite widespread concern among many Americans about high prices, an analysis suggests that even if the Supreme Court curtails these tariffs, it may not significantly alleviate broader inflation, as tariffs have had a limited impact on overall price hikes to date. The court heard arguments on Wednesday, November 5, 2025.
Supreme Court Scrutiny
A majority of the justices expressed concern that Trump may have overstepped his authority in levying tariffs with practically zero limits. The article highlights instances where Trump imposed high import taxes, effectively creating a temporary embargo on Chinese goods, retaliated against Brazil following the conviction of a political ally, and pressured India regarding Russian oil.
These actions have been central to Trump’s signature economic policy. The Supreme Court’s ruling, which could take several months, will determine the scope of presidential power in trade matters.
Tariffs’ Limited Impact on Inflation
Many Americans link tariffs to high prices, with a recent CNN poll indicating that 72% believe the US economy is in bad shape and 61% feel Trump’s policies have worsened economic conditions. However, the analysis by David Goldman argues that tariffs have not been the primary driver of the current inflation experienced by consumers.
US government inflation data shows that while tariffs have gradually raised prices for certain exclusively imported goods, such as shoes and furniture, the overall pace of price hikes has not been dramatic. Annual inflation rose to 3% in September, a significant increase but still well below the 9% rate observed during the post-pandemic inflation crisis.
Factors Mitigating Tariff Effects
Several factors have contributed to the limited impact of tariffs on overall prices. Trump delayed the implementation of his most significant tariffs multiple times, allowing businesses to stockpile goods in anticipation. Additionally, most foreign trading partners, with the exception of China, largely opted not to retaliate, preventing a broader global trade war.
Furthermore, businesses have, for the most part, absorbed a significant portion of the tariffs’ cost. A JPMorgan analysis indicates that companies have chosen to pay roughly 80% of these costs, at least for now.
Broader Economic Pressures
While tariffs have not been the main cause of inflation, their costs have contributed to a slowing job market, according to JPMorgan economist Michael Hanson. There is also mounting evidence that companies are preparing to pass along these costs to consumers, with recent Producer Price Index reports showing rising wholesale prices.
The primary driver of economic dissatisfaction among Americans is the cumulative effect of higher prices over the past five years. The typical household is now spending $1,043 more per month for the same goods compared to early 2021, a period where paychecks have not kept pace with rising costs. This sustained inflation, which reached a four-decade high in 2022, has deeply affected consumer sentiment.
Trump’s Remaining Tariff Options
Even if the Supreme Court ultimately rules against the bulk of his tariffs, President Trump retains other legal avenues to impose trade levies. These include Section 232 of the Trade Expansion Act of 1962, which allows for tariffs on national security grounds, and Section 301 of the Trade Act of 1974, which permits tariffs against nations violating trade agreements.
Another option is Section 338 of the Tariff Act of 1930, which, though never used, would allow a president to raise tariffs up to 50% on countries engaged in discriminatory trade practices. JPMorgan CEO Jamie Dimon commented that while tariffs are “a factor,” they may not be the “deciding factor” in the continued growth of the US economy.
Outlook on Tariffs and Inflation
Ultimately, while the Supreme Court’s decision on President Trump’s tariffs carries significant legal weight, the direct economic ramifications for consumer prices may be less dramatic than commonly perceived. The broader challenge of inflation stems from cumulative price increases over several years, with businesses potentially absorbing tariff costs for now. However, the possibility remains that these costs could eventually be passed to consumers, and Trump retains other legal avenues to implement trade levies.
