WASHINGTON, November 3 (Reuters) — U.S. factory equipment manufacturer OTC Industrial Technologies has long relied on low-cost countries for component supplies — first China, then India. However, President Donald Trump’s extensive tariffs on various trade partners have disrupted the company’s supply chain, forcing CEO Bill Canady to rethink sourcing strategies.
“We moved things out of China and went to some of those other countries, and now the tariffs on those are as bad or worse,” Canady told Reuters. “We just have to hang on and navigate our way through this so we don’t all go broke in the short run.”
This dilemma is now being felt across businesses, trade ministries, and economists as the U.S. Supreme Court reviews the legality of Trump’s global tariffs. Oral arguments are set for Wednesday, and many believe that — one way or another — Trump’s tariffs are here to stay.
Lower Courts Previously Ruled Against Trump
Trump is the first U.S. president to use the IEEPA — traditionally applied to sanction hostile nations — for broad global tariffs. The act grants presidents wide authority to regulate international economic activities during a declared emergency. The Supreme Court, which currently holds a 6-3 conservative majority that has supported Trump in several major rulings this year, is now hearing the administration’s appeal. Lower courts had earlier ruled that Trump overstepped his authority in imposing widespread tariffs using a law designed for emergencies. Test of Presidential Power. The Supreme Court cannot stop all of Trump’s tariffs. Deal with it.
If the Court strikes down Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose tariffs, it could limit a powerful tool presidents have used to punish nations over political or non-trade disputes — including Brazil’s treatment of former president Jair Bolsonaro and India’s oil imports from Russia.
Trump defended his actions on Air Force One, saying:
“If we don’t have tariffs, we don’t have national security, and the rest of the world would laugh at us because they’ve used tariffs against us for years and took advantage of us.”
He added that tariffs have strengthened national security and said he will not attend Wednesday’s hearing. However, Treasury Secretary Scott Bessent confirmed he will be present “to emphasize that this is an economic emergency.”
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Tariffs Under National Emergency Declaration
Trump is the first U.S. president to use the IEEPA — traditionally applied to sanction hostile nations — for broad global tariffs. The act grants presidents wide authority to regulate international economic activities during a declared emergency. The Supreme Court cannot stop all of Trump’s tariffs. Deal with it.
In this instance, Trump declared the $1.2 trillion U.S. goods trade deficit in 2024 a national emergency, citing long-standing deficits since 1975 and the opioid crisis involving fentanyl as additional justification.
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Administration Expects Court to Uphold Tariffs
Bessent told Reuters that the administration expects the Supreme Court to uphold the IEEPA-based tariffs. However, he added that if the Court overturns them, Trump will shift to other legal authorities, including:
- Section 122 of the Trade Act of 1974, allowing 15% tariffs for 150 days to correct trade imbalances.
- Section 338 of the Tariff Act of 1930, which permits tariffs of up to 50% on countries that discriminate against U.S. commerce.
“You should assume that they’re here to stay,” Bessent said of Trump’s tariffs.
He also noted that countries with tariff-lowering trade deals with the U.S. should “honor their agreements” to maintain favorable terms.
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Broader Tariff Authorities Already in Use
The current Supreme Court case addresses only a portion of Trump’s tariffs. His administration already relies on other authorities for several categories:
- Section 232 of the Trade Expansion Act of 1962, covering national security-related tariffs on sectors like autos, copper, semiconductors, and pharmaceuticals.
- Section 301 of the Trade Act of 1974, addressing unfair trade practices.
“This administration is committed to tariffs as a cornerstone of economic policy,” said Tim Brightbill, co-chair of Wiley Rein’s trade law practice. “Companies and industries should plan accordingly.”
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Tariffs as a Negotiating Tool
Trump’s team claims that tariffs have compelled major trading partners — including Japan and the European Union — to make significant concessions aimed at reducing the U.S. trade deficit. They believe these concessions will stand, even if parts of the tariff structure are struck down.
The U.S. Trade Representative’s office has recently finalized trade frameworks with Vietnam, Malaysia, Thailand, and Cambodia, setting tariff rates between 19–20%. South Korea agreed to a $350 billion investment plan in exchange for a 15% tariff rate on its exports.
However, talks with China have been more challenging due to its retaliatory stance and its control over critical materials like rare earth elements vital to U.S. manufacturing.
Last Thursday in South Korea, Trump met with Chinese President Xi Jinping, agreeing to halve tariffs on Chinese goods linked to fentanyl to 10% and delay tech export controls for one year. In return, China agreed to pause new licensing restrictions on rare-earth exports and resume U.S. soybean purchases.
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Market and Revenue Implications
Financial markets — especially the Treasury debt market — could face turmoil if the Supreme Court invalidates the IEEPA tariffs. Reversing them could require refunding over $100 billion in collected duties, while eliminating a major revenue source for the federal government.
The IEEPA tariffs have generated much of the $118 billion increase in customs receipts for fiscal year 2025, helping offset rising federal spending.
Economists warn that dependence on tariff revenue could pose long-term fiscal risks.
“It’s a significant political economy risk that we get addicted to tariff revenue,” said Ernie Tedeschi, senior fellow at the Yale University Budget Lab.
Reversing the tariffs would also be logistically difficult, said Angela Lewis of Flexport, noting that refunding importers would require complex, years-long “post-summary corrections.”
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Inflation and Cost Management
So far, most importers have absorbed tariff costs, limiting inflation but squeezing corporate profits. However, analysts note that cost pass-throughs are now expanding into consumer goods such as clothing.
According to Oxford Economics, tariffs added 0.4 percentage points to September’s 3.0% annual Consumer Price Index, keeping inflation above the Federal Reserve’s target.
Corporate earnings have been hit hard, with global firms reporting over $35 billion in tariff-related expenses heading into Q3 2025.
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How Guru Packaging Relates to This Global Trade Shift
At Guru Packaging, we understand how global trade policies — including tariffs and import costs — can directly affect packaging and supply chains. Our mission is to help businesses adapt by providing custom packaging solutions that balance quality, sustainability, and affordability, regardless of market fluctuations.
As U.S. companies rethink sourcing and logistics, we continue to offer innovative packaging options that help brands stay resilient, eco-conscious, and competitive in a changing economic landscape. From custom retail boxes to wholesale packaging solutions, Guru Packaging supports businesses navigating new trade realities with confidence and flexibility.
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❓ FAQs
Q1: How do Trump’s tariffs affect U.S. businesses in 2025?
They raise import costs on raw materials and goods, forcing many U.S. companies to rethink their supply chains or move production closer to home.
Q2: What is the International Emergency Economic Powers Act (IEEPA)?
It’s a U.S. law that allows presidents to regulate trade and impose tariffs during declared national emergencies.
Q3: Will the Supreme Court remove Trump’s tariffs?
Experts say it’s unlikely all tariffs will be removed — most are expected to stay under different legal authorities.
Q4: How are tariffs impacting U.S. manufacturing and packaging costs?
Tariffs increase material prices, affecting sectors like packaging, manufacturing, and retail that rely on imported supplies.
Q5: What’s the long-term impact of U.S. tariffs on global trade?
They may lead to a “new normal” where trade routes shift, manufacturing diversifies, and countries strengthen regional partnerships.
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