Why a Tariff Ruling Could Mean Consumer Relief

The U.S. Supreme Court’s upcoming decision on the International Emergency Economic Powers Act (IEEPA) could significantly lower effective tariff rates on consumer goods from 15% to approximately 11.5%. While national security and unfair trade practice duties would remain, IEEPA-related tariffs currently account for 60% of apparel duties, 70% of furniture duties, and over 90% of those on toys and sporting equipment. A ruling against executive authority would create an immediate margin tailwind for retailers before eventually passing 60% of the cost savings to consumers over two to three quarters. Although policymakers might attempt to use alternative tools like Section 122 to reinstate these duties, a curtailment of IEEPA would likely accelerate core goods disinflation and provide disproportionate financial relief to middle- and lower-income households.