Atlanta Federal Reserve President Raphael Bostic said the U.S. Supreme Court’s ruling against a broad set of import tariffs complicates the central bank’s effort to gauge the policy’s effects on inflation and broader economic activity.
Speaking in Birmingham, Alabama, Bostic flagged several unresolved practical issues that could influence price trajectories and business behavior. "Is there a requirement to pay back the firms that have paid in?...If so that’s a lot of disruption," he said, pointing to the potential need to refund companies that had already borne the cost of the tariffs.
He also queried how firms might respond to the decision: "Does this cause businesses to revert back to old business models about where they are getting their supplies?...Will there be another vehicle to put all those tariffs in at the same level?" Those questions, Bostic said, make it difficult to determine the ruling's net impact on consumer prices and company margins.
Bostic emphasized that the ultimate fallout is uncertain and depends on a small set of concrete factors, notably whether rebates would be required and how businesses adjust their supply arrangements and pricing strategies. "It is hard to know the fallout from the Supreme Court ruling on tariffs," he said, noting the outcome "hinges on issues like the need for rebates and how firms react."
The Supreme Court, in a 6-3 decision, ruled that President Trump's use of emergency powers to establish global tariffs was unconstitutional. That judgment leaves open logistical and economic questions that, according to Bostic, could create disruption for affected firms and complicate the Federal Reserve's interpretation of recent price signals.
For policymakers at the Fed, clarity about whether past tariff payments must be returned and how businesses will restructure sourcing is relevant because those dynamics can alter input costs, consumer prices and the transmission of monetary policy. Bostic's remarks underscore the operational uncertainty that can follow a major legal decision on trade measures and the subsequent challenge for central-bank officials attempting to parse inflation drivers in real time.
Until those practical matters are resolved, Bostic suggested, the scale and persistence of any price effects remain unclear, leaving Fed officials with additional variables to consider as they evaluate economic data and policy options.