The U.S. Treasury Department may soon be on the hook for rebates on nearly half of the tariffs imposed by the Trump administration earlier this year, Treasury Secretary Scott Bessent warned on September 7.

Speaking to NBC News’s Meet the Press, Bessent described the scenario as “terrible” for the department, which would have to issue refunds, representing a significant loss in federal revenue. “If the court says it, we’d have to do it,” he said, noting that the administration is optimistic it will prevail in the Supreme Court.

Despite the looming legal challenge, Bessent hinted at alternative avenues to impose tariffs if the high court rules against the Trump administration, though he did not provide specifics.

National Economic Council Director Kevin Hassett echoed the point on CBS News’s Face the Nation, suggesting that Section 232 tariffs could offer legal pathways for imposing import restrictions or forcing negotiations with foreign governments following investigations.

The case stems from a July ruling by the U.S. Court of Appeals for the Federal Circuit, which found that most of President Trump’s reciprocal tariffs imposed in April were illegal. The 7–4 decision concluded that the president had exceeded authority granted under the International Emergency Economic Powers Act (IEEPA) of 1977, which does not explicitly authorize tariffs, duties, or taxation.

The appeals court wrote that “it appears unlikely that Congress intended…to grant the President unlimited authority to impose tariffs.” The ruling, set to take effect on October 14, prompted the administration to appeal to the Supreme Court on September 3.

Solicitor General D. John Sauer argued that the case affects ongoing trade negotiations. “That decision casts a pall of uncertainty upon ongoing foreign negotiations…jeopardizing both already negotiated framework deals and ongoing negotiations,” Sauer wrote, requesting that the justices take up the case in November.

When asked whether the tariffs could contribute to an economic downturn, Bessent remained confident. “President Trump…was proven right. We had the quickest stock market recovery in history. We’re at new highs in August, and we’re not going to do economic policy off of one number. Good policies are in place that will create high-paying jobs for the American people,” he said.

As the Supreme Court considers the case, the stakes are high—not only for the Treasury Department’s bottom line, but for the broader trajectory of U.S. trade policy and international negotiations.