Back in the day, the arrival of the postman was a big deal. E-mail and texting existed only in the dreams of technologists, so people communicated with one another by writing letters. E-commerce was similarly futuristic; physical catalogues presented the world of the possible for consumers. Receiving something in the mail was exciting, and those items were savored for a long time.
It was quite an achievement for mail carriers to clear the inventory in their tote bags each day. In modern parlance, “emptying the mailbag” has come to mean clearing the inventory of questions that have arrived, but which haven’t yet been answered. This week, we attempt to clear our mailbag of the major questions that have been coming in about tariffs, the biggest economic theme of 2025.
1. Will the Supreme Court strike down U.S. tariffs before the end of the year?
A majority of the tariffs enacted by the United States in 2025 have been justified by the International Emergency Economic Powers Act (IEEPA). The Trump Administration has contended that persistent and deepening trade deficits constitute an economic emergency, which the IEEPA grants broad latitude to address.
A collective of businesses and states filed a challenge to this interpretation in court, which has been upheld at two levels. The Supreme Court will take up the issue in November; if the White House is deemed to have applied the IEEPA inappropriately, the bilateral tariffs applied at a country level will be stricken down. The court also has the ability to order refunds of the monies collected from importers under this regime.
But that would certainly not be the end of the story. As we covered in our June piece “Tariff Detour,” there are other avenues that could be used to resurrect the tariffs.
Section 301 requires an investigation into the objectionable trade practice before a tariff can be applied; the Trump Administration has initiated a number of these. The other avenues carry some limitations, but these could be sustained with the support of Congress. And product- or sector-specific protections, justified as matters of national security, are out of the scope of this challenge. So while the specific expression of tariffs may change if the courts rule against the Administration, their impact is unlikely to diminish.
2. Who is bearing the burden of tariffs?
When asked this question during client meetings, I often invite those assembled to take out their phones, flip the camera into selfie mode, and regard the image on their screens. Ultimately, we will all end up paying.
To date, however, tariffs haven’t made a substantial impression on prices. There are several reasons for this: some of the more significant levies only went into force on August 1, and companies had been preparing for their arrival by stockpiling inventories from overseas. These elements serve to defer the consequences.
Analysis published by Goldman Sachs found that American importers are absorbing the lion’s share of tariff costs to date. Their behavior may be motivated by a desire to sustain market share, or a hesitance to pass along costs of tariffs which may yet change. But past tariff episodes suggest that this forbearance is only temporary, and consumers eventually inherit most of the burden.
Alternative assumptions might certainly change the allocations in the charts above, but the Administration’s suggestion that consumers will be little affected is unlikely to be realized.
3. Will U.S. tariffs be reversed if there is a change of government?
The use of tariffs has mushroomed this year under the direction of the White House. The U.S. Congress has the Constitutional authority to limit their application, but it has declined to do so.
We have often been asked whether a change in the control of the Congress (or later on, the White House) could result in curbs on tariffs, or even their abolition. From this perspective, those outcomes are highly unlikely.
The first reason for this is political. U.S. Democrats have historically been the party of labor, and have traditionally viewed trade with skepticism. Quietly, many in the party support the goals of reshoring production and providing opportunities to working-class populations. That latter community has been especially influential in recent elections, and it would be very difficult to secure and sustain their support with lower levels of protectionism.
The second reason is fiscal. U.S. customs revenue has been rising sharply, and the nonpartisan Tax Foundation projects that these receipts will total about $2.3 trillion over the next ten years on a gross basis. Actual receipts will likely be a good deal less than that, as producers adjust their supply chains and households adjust their consumption in response to the tariffs. But the sums are still substantial.
With deep budget deficits stretching as far as the eye can see, revenue sources are prized. Rolling back tariffs would deprive the federal government of funds that it desperately needs. Keeping them in place would be easier for future Democratic leaders than raising taxes or trying to find economies in major spending programs.
The array of tariffs now in place is a patchwork of product-specific and country-specific levies. A different government might alter the formulation…so long as the totals remain the same.
While I hope that the contents of this essay provide useful perspective on the tariff picture, I have little doubt that other significant questions on the topic will arrive in my mailbox. My nostalgia for pen-pals and department store catalogues is growing by the day.
Information is not intended to be and should not be construed as an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Under no circumstances should you rely upon this information as a substitute for obtaining specific legal or tax advice from your own professional legal or tax advisors. Information is subject to change based on market or other conditions and is not intended to influence your investment decisions.
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