Portuguese 
English 
Spanish 
4 min of reading 
0 comments 
Appeal of August 29 Against the Use of IEEPA Opened the Way for Urgent Review by the Supreme Court. If the Government Loses, Part of the Tariffs Collected in 2025 Could Be Returned, Affecting the Strategy to Reduce the Deficit.
The most sensitive decision for the U.S. public accounts in 2025 rests in the hands of the Supreme Court. The justices agreed to review, on an expedited basis, the validity of the tariff package created by President Donald Trump based on the International Emergency Economic Powers Act (IEEPA). The review follows the Federal Circuit Court of Appeals upholding, on August 29, the conclusion of the International Trade Court that the IEEPA does not authorize the broad and indefinite tariffs imposed this year.
The legal discussion is straightforward, presidents can “regulate” imports in emergencies, but does this include creating tariffs with almost universal reach? The understanding of the appellate panel was that tariffs are taxes and therefore require explicit delegation from Congress. Experts from the Brookings Institution emphasize that precedents and the language of the IEEPA do not confer unlimited power to raise tariffs without clear substantial and temporal limits.
While the case is being tried, specific charges made under the IEEPA remain temporarily in effect. However, if the Supreme Court confirms the restrictive reading, the Treasury would have to stop collecting on these items and refund amounts. The government itself acknowledges this risk by requesting expedited processing and admitting the possibility of refunds.
-
For the economist José Kobori, the USA gained a trump card to “blackmail” Brazil and undermine China’s influence by classifying the PCC and Comando Vermelho as terrorists, increasing the power to pressure companies, banks, and even Pix.
-
The labor shortage has changed its face in Brazil: companies hire 80% more, but workers stay only 6.8 months in the job, the service market becomes a “revolving door,” and businesses spend increasingly more to train teams that soon leave.
-
Chinese giant chooses SC to set up its first factory in Brazil, investing R$ 250 million and producing MRI machines costing R$ 10 million each, with 100 direct jobs and 5% of revenue allocated to research.
-
After selling a unit for R$ 115 million to pay off debts, a traditional factory in SC founded in 1932 has a new R$ 64.8 million plan denied by the court and retains about 690 workers in Joinville.
Sources in the legal sector remind that a defeat does not eliminate the entire tariff framework of the U.S. Measures supported by other laws, such as Sections 232 (national security) and 301 (unfair trade practices), would remain valid, which reduces part of the immediate impact on industrial and trade policy.
How Much Revenue Has Increased and Why It Matters for the Deficit
The figures show an unusual jump in revenue. In August 2025, “customs duties” hit a record of about US$ 30 billion for the month, according to data from the Treasury Department compiled by the economic press. For the fiscal year to August, revenue from tariffs totaled between US$ 165 billion and US$ 172 billion, well above the pace of 2024.
This extra cash flow is central to the government’s fiscal narrative. The deficit totaled US$ 1.97 trillion in the first 11 months of the fiscal year, according to the August budget report, which also highlighted the strong contribution of tariffs to the momentary improvement in the monthly balance. Nevertheless, the need for financing remains high, and any judicial reversal that requires refunds could pressure public accounts again.
The fiscal discussion goes beyond 2025. Projections from the Congressional Budget Office (CBO) indicate that public debt is likely to surpass the post-World War II peak around 2029, which explains why new sources of revenue are viewed favorably by the market. Without tariffs supported by the IEEPA, efforts to reduce the deficit would depend even more on growth, spending cuts, or tax changes.
Rating analysts are also monitoring the issue. In August, S&P Global Ratings reaffirmed the AA+ rating of the U.S. and noted that the additional influx of tariff revenues could mitigate the fiscal effects of new stimuli and tax cuts, although it warned that a sustained increase in deficits could still pressure the rating.
Scenarios for the Decision, Refunds, Redesign, and Effects on the Real Economy
If the Supreme Court invalidates the application of the IEEPA for tariffs, estimates from the Budget Lab at Yale University point to a loss of about US$ 1.5 trillion in revenues over ten years, keeping only revenues from tariffs based on other laws. This would significantly lower the projected fiscal gain and require a recalibration of the strategy.
The Treasury, led by Scott Bessent since January, has publicly acknowledged that a setback could force refunds of part of what was collected under the IEEPA. Still, aides and analysts remind that the White House could redesign part of the package using existing legal bases, such as Sections 232 and 301, which would maintain some revenue but with different scope and timing.
For companies and importers, regulatory uncertainty has its own cost. “Customs duties” are mainly paid by American importers, who pass some of the burden onto the final price. Fluctuations in rules and effective rates tend to affect supply chains, margins, and investment decisions, including changes in production origin among countries.
In the short term, the market will watch three points: the court hearing schedule in the Supreme Court, clues about legal alternatives that the Executive may pursue if it loses, and the next Budget Report from the Treasury, which will show if tariff revenue maintains the record pace of August. Until then, the view prevails that the legal outcome will have a direct effect on the trajectory of the deficit and on the government’s financing cost.
Do you think the Supreme Court should limit the use of the IEEPA for tariffs or does the Executive need broad margin in economic emergencies? Do you believe that high tariffs are an effective tool to reduce the deficit or do they merely shift costs to consumers and businesses? Leave your comment and join the debate.
-
-
3 people reacted to this.