Supreme Court tariff ruling leaves SMBs navigating uncertainty – Steve Cotton | Cotton Wealth Management Association

Financial strategist and President of the Cotton Wealth Management Association, Steve Cotton, discusses the recent Supreme Court ruling on President Trump’s tariff policy. He highlights that this decision has created uncertainty for SMBs regarding their costs and supply chains on today’s episode of Business Trends Today.

The court ruled that tariffs implemented under the International Emergency Economic Powers Act (IEPA) fall under Congress’s authority over taxation rather than presidential trade powers. The ruling did not clarify whether refunds would be issued for tariffs already paid, leaving a legal gray area.

According to Cotton, there were two views on how the court might rule heading into last week. One thought was that if the court interprets the IEPA as basically a trade policy instrument, it would find in Trump’s favor. However, an alternative argument was that if they found that tariffs were essentially a form of taxation, that would be within Congress’s purview and might find against the president. And in fact, that’s what they did. They did the latter. The Supreme Court interpreted it more as a tax policy issue than a trade policy issue. But it failed to speak to the issue of refunds. And Cotton notes that’s what’s got everybody.

The ruling highlights the complexity of U.S. trade policy. While the administration could continue tariffs using the Trade Act of 1974 or other legal instruments, those alternatives are process-heavy, temporary, and less straightforward than the executive powers initially relied upon. Businesses are navigating both the uncertainty of legal interpretation and the potential for policy changes depending on future legislation or executive decisions.

For small business owners, the uncertainty affects operational decisions and long-term planning. Many companies have already diversified supply chains, shifted toward American-made products, and adjusted operations in anticipation of potential tariff impacts. However, not all businesses are equally positioned to make these changes, and some continue to face significant risk from ongoing trade policy volatility.

“But the Trade Act of 1974 is one of three instruments that the president could use to continue to pursue the trade policy, but it's problematic because it's very process heavy, it's cumbersome, and it's also not permanent. It's more short-term fix.”

Analysts emphasize that small businesses, which account for roughly 70% of the U.S. economy, must prepare for continued uncertainty by diversifying suppliers, securing resources, and planning for possible ongoing costs rather than relying on refunds or immediate policy stability.

The Supreme Court decision underscores the interplay between executive authority, Congress, and the practical realities facing business owners, highlighting the need for resilience, strategic planning, and close attention to policy developments that could affect the economic environment for small and mid-sized companies.