US President Donald Trump on April 2, the day he announced sweeping tariffs that are now being legally challenged. Photo / Jabin Botsford, The Washington Post
The Supreme Court appeared sceptical of arguments today that United States President Donald Trump has legal authority to impose tariffs on a vast range of goods from nearly all countries, signalling the justices could strike down or limit the Administration’s signature economic policy.
The justices sharply questioned Solicitor-General John Sauer and lawyers for states and small businesses that challenged the tariffs during more than two and a half hours of arguments.
It is the most significant case over Trump’s policies to reach the high court to date and the first in which the justices could be called on to render a final decision.
Many of the justices were sceptical that Trump had the power to impose sweeping tariffs with few bounds, since the Constitution squarely gives that power to Congress.
Liberal Justice Sonia Sotomayor was blunt with Sauer at one point.
“I just don’t understand,” she said of his arguments. “This is not a presidential power. It’s a congressional power.”
The stakes could hardly be higher.
The decision could affect global trade, the US economy, inflation, businesses and the wallets of every American.
This case is the first major test of whether the court will embrace or limit Trump’s assertions of broad executive power in his second term.
The ruling could also be a make-or-break political moment for Trump’s presidency.
He has made tariffs central to his tenure, wielding them as leverage not only in trade negotiations but in a wide range of disputes both large and small. He called the case “one of the most important in the History of the Country” in a Truth Social post this week.
“If a President was not able to quickly and nimbly use the power of Tariffs, we would be defenceless, leading perhaps even to the ruination of our Nation,” Trump wrote.
The importance of the case is underscored by the fact that the Supreme Court agreed to hear it on an expedited basis. That could indicate the justices may issue a decision in the coming weeks or months, rather than at the end of the term in June or July when they typically release major rulings.
Beginning in February, Trump began announcing major tariffs, claiming authority to do so under a 1977 law called the International Emergency Economic Powers Act (IEEPA), which has typically been used to sanction foreign countries that pose a threat to the US. No president had previously claimed that the law gave them the authority to impose tariffs.
In that February round of tariffs, Trump levied import taxes between 10 and 25% on China, Mexico and Canada for allegedly failing to stem the flow of fentanyl and other drugs across the border.
In April, at an event he dubbed “Liberation Day,” Trump announced a universal 10% tariff on nearly every American trading partner and higher levels on some individual countries.
Trump said the taxes were intended to close trade deficits that he said have decimated American manufacturing.
By some measures, the average tariff rate is higher than at any period since the Great Depression. Trump has repeatedly imposed levies, then delayed or revoked them, which has unsettled financial markets, businesses and global trade.
The Constitution assigns Congress the power to “lay and collect Taxes, Duties, Imposts and Excises”, but lawmakers have delegated some of that power to the chief executive through various laws.
Trump could use those laws to reimpose some of his tariffs if he loses the current case - a point that some of the justices noted.
Most of those laws, however, impose procedural and substantive requirements that don’t allow for the sort of freewheeling, wide-ranging power Trump has claimed the international emergency law gives him.
That law allows the president to declare an emergency to “regulate...importation” of foreign goods to “deal with any unusual and extraordinary threat” to “national security, foreign policy, or economy”.
The law does not, however, specifically mention the word tariff.
Trump officials argue the economic emergency law’s language about regulating importation covers tariffs. They highlight that courts upheld President Richard Nixon’s power to impose tariffs under a statute that was a predecessor to the act and used the same language.
Sauer framed the use of Trump’s tariffs in dire terms today, saying “exploding trade deficits” had undermined the US economy.
“They threaten the bedrock of our economic security,” Sauer said.
Small businesses and states that sued over Trump’s tariffs say he has greatly overstepped his authority.
Neal Katyal, a lawyer who represented the small businesses, pointed out that no previous president understood the economic emergency law to grant the authority Trump claims.
Trade deficits, which have existed for decades, do not meet the definition of an emergency necessary to invoke the law’s powers, he argued.
He also said Congress had been clear when it granted the president the power to impose tariffs in other statutes and always included strict limits.
“This is an open-ended power to junk the tariff laws,” Katyal said of Trump’s use of the act.
One significant question the justices grappled with is whether Trump’s tariffs violate the court’s “major questions” legal doctrine, which holds that the executive branch must have explicit legal authority from Congress to carry out policies that have major economic or political consequences.
The high court’s conservative majority invoked that doctrine to strike down Biden administration initiatives on student loan forgiveness, coronavirus vaccine mandates, and climate change.
Chief Justice John Roberts expressed scepticism that Trump’s use of the act could pass the major questions test, since the president has interpreted the law to provide him virtually unlimited tariff powers.
“It does seem like that’s a major authority,” Roberts said.
The debate before the court has vast implications.
The non-profit Tax Foundation says the Trump Administration has already collected US$88 billion in IEEPA tariffs to September and is projected to take in US$2.3 trillion over the next decade.
The Administration says the tariffs are restoring America’s industrial base and have induced trading partners to make deals and invest in the US.
It also says a ruling against the Administration will force the Treasury to refund tens of billions of dollars, which will put a strain on the nation’s finances and create a logistical mess.
Critics say the tariffs are leading to higher inflation and are a major drag on the US economy.
Consumer prices rose in September, an increase many economists attributed in part to Trump’s tariffs. The labour market has also softened in recent months.
The Tax Foundation estimates the average US household will pay an extra US$1300 in taxes in 2025, while the Yale Budget Lab calculates households will have to shell out about US$2400 this year for tariff-related mark-ups.
Democratic-led states and small businesses have led the charge against tariffs in a handful of lawsuits. A federal judge in Washington DC ruled in one case in May that the emergency law did not grant the president the power to impose tariffs.
In another case, a divided US Court of Appeals for the Federal Circuit found Trump’s bid to impose tariffs without real limits or a sunset went too far. The court did not rule out the possibility he could use the emergency law to impose some tariffs.
The cases were consolidated after the Administration appealed the latter ruling to the Supreme Court in September.
The court’s conservative majority has been sympathetic to Trump’s assertion of broad presidential power. It has allowed the president to fire the heads of independent agencies, freeze funds appropriated by Congress and gut the Education Department over the first nine months of his second term.
The tariff case is the first of three that will determine how much further the court is willing to go.
In December, the court will consider whether to overturn a 1935 precedent that insulates independent agencies from political interference by the White House. In January, it will explore whether Trump can fire a member of the Federal Reserve.
Trump had indicated initially that he would attend the court’s argument but later backtracked saying he didn’t want to be a distraction. He was not in attendance today.
Christine Abely, a law professor of law at the University of New Hampshire, said the court’s decision will have enormous implications, especially if the justices side with the president.
“This would really be a fundamental shift in I think what a lot of legal scholars view as the president’s authority to impose tariffs,” Abely said.
“I think it would really open the door to a much broader ability by the president to impose tariffs than what was thought to have existed up until this point.”
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