A landmark Supreme Court ruling declared the Trump administration did not have the authority to issue tariffs under the International Emergency Powers Act. While the decision provides an element of clarity, we are far from trade certainty. Leaders looking to navigate by steering growth, not stumbling in policy aftermath, now have an opportunity to pause, reset, and thrive in this changing environment.
A landmark Supreme Court ruling declared the Trump administration did not have the authority to issue tariffs under the International Emergency Powers Act (IEEPA). While the decision provides an element of clarity, we are far from certainty for trade policy. Tariffs are a pressing leadership topic, but the changing on/off nature is making strategic discussions and subsequent decisions difficult. But these fuzzy environments actually represent great growth opportunities. Leaders looking to navigate by steering growth, not stumbling in policy aftermath, now have an opportunity to pause, reset, and thrive in this changing environment.
Where are we, what’s next, and what can leaders do?
Where we are
The Supreme Court arguments in November were narrowly focused on the legality of the tariffs: whether they are ‘good’ for U.S. companies or consumers was not in play. The Court, with a 6-3 majority, ruled that in IEEPA Congress did not delegate the authority to the President to enact tariffs. It remains a highly consequential ruling, though it is a narrower one than some wanted.
The process of issuing refunds (more than 130 billion was collected under IEEPA) was also not addressed in the Supreme Court decision. This was delegated to a lower court, and in early March the U.S. Court of International Trade wrote all importers of record were entitled to benefit from the Supreme Court ruling, though all refund cases had to flow through the Court.
What’s next
As this was a narrow statutory (not constitutional) ruling, the administration has plenty of other statute-driven options, and tariffs enacted under something besides IEEPA remain in place. The next set of tariffs are imposed under Section 122, a trade statute that says the executive can impose tariffs to settle international payments problems. They can only last 150 days without congressional approval, and the tariffs cap at 15%. Once these run out, there are a few other options exist, but these statutes are more time-limited and narrow, such as Section 232 for threats to national security or Section 201 for threats to domestic industry.
Cost of tariffs
Tariffs are a tax, and taxes have costs. Multiple studies show that over 90% of the tariff costs were paid by the importer, whereas anywhere from 20% to 50% of these costs were passed onto consumers, so far. This has led to a tax of around $2,000 per American household, but this will fall to only a few hundred dollars under 122 tariffs. The impact on inflation is likely around 0.4% and 0.5% of the CPI impact. Tariffs are also universally disliked, with most polls showing the majority of Americans are concerned about the impact of tariffs on their finances and are making everyday items less affordable. Tariffs, even if they worked in boosting US production, were going to be a midterm effect, but the short-term impacts were dire: manufacturing output rose by only 1% in 2025. Updated estimates show 108,000 jobs were lost in the sector in 2025.
What not to do:
- Distraction or delusion: Assuming a ruling will lessen the significance of tariffs as a policy play or negotiating tactic is delusion. Keeping your head down and ploughing forward is not recommended: we have one element of clarity, but we do not have certainty. Distraction is just as troubling, getting bogged down into rebate policies or the minutia of court filings.
- Holding pattern: It’s tempting to pause and wait ‘until we get more information’ – this decision-making paralysis where you punt decisions for weeks or months places your company in a constant holding pattern. In-decision has a cost just as poor ones do.
- Prediction time: Key to performing through uncertainty is to acknowledge that while we cannot predict the future, we can instead focus on making great decisions, even though we cannot make great predictions. Predictions are tempting but a trap
What to do:
The leadership power move is to shift from planning to preparing. Here’s a few ways to do so:
- Articulate your beliefs. Key to any strategic decision is separating the trend (what we are seeing and hearing) from your belief (your stance on how it will play out) from the implication (what you should do). Most organizations fall into the trap of jumping from trend to implication: we are seeing X, so we must do Y. That is, we are seeing a threat of 25% tariffs, therefore we must stockpile inventory. Given the current administration’s tendency to bold announcements and scattered action, knee jerk responses are especially problematic.
- Identify your kickers and killers: Shift the conversation from ‘what could happen’ to ‘what could make us’ or ‘what could break us.’ These are your kickers and killers. Identify the potential big upsides and the business model killers (For example, 90% of a critical and price sensitive supply is in China). When you have killers, you need to start making moves, even when beliefs remain untested.
- Isolate your no-regret moves: When making decisions, look for ‘no regret’ moves. These are moves that even if you got your beliefs wrong, you would not regret making this move. Investing in your own manufacturing facility is a regret move – if tariffs don’t materialize you would regret that massive capital outlay, but vetting additional suppliers is a no-regret move.
- Use multiple strategic stances: We are programed to act, and most leaders pride themselves on a bias to action, but sometimes it’s ok to wait, if it’s purposeful. You can actively wait while you watch and learn. And when you act, you can also make moves to shape the environment in your favor through advocacy, lobbying, or related. And, critically, you can also act to learn more. Lean in and learn faster than any other. How? Map out supply chain, talk to key customers, and work with partners.
Value creation does not change: Keep your focus
When times feel volatile, it is easy to focus on what is changing, but as leaders the key is to also anchor on constants. One non-changing element in the current strategic environment is the definition of growth strategy. Strategy remains an articulation of how an organization creates value, and the role of value creation is to guide your organization as it drives the biggest gap possible between two levers: your customer or client willingness to pay for your products, services, and solutions and your total cost of delivering them that value.
It is easy to get distracted from the main purpose, but leaders should stay laser focused on value creation insights and opportunities. Tariffs, and similar macro events, are what I call a fair disadvantage: they are in the market for all. Your role is to turn these fair disadvantages into unfair advantages and continue to create value through this uncertainty.
About the Author
Dr. Rebecca Homkes is a high-growth strategy specialist and CEO and executive advisor. She is a Lecturer at the London Business School, Faculty at Duke Corporate Executive Education, Advisor and Core Faculty for BCGU (Boston Consulting Group), and a former fellow at the London School of Economics Centre for Economic Performance. She earned her doctorate at the London School of Economics as a Marshall Scholar and is now based in Miami, San Francisco, USA and London. UK.
