The Supreme Court will quickly assess the legality of Donald Trump’s tariffs, affecting global trade. Photo / Jabin Botsford, The Washington Post
The Supreme Court today announced it will quickly weigh the legality of most of United States President Donald Trump’s sweeping tariffs.
It is a far-reaching case that could determine the fate of a cornerstone of the President’s agenda and alter the course of the US economy and global trade.
The justices asked the Government and a group of small businesses and states to expedite briefings in the case, setting a deadline of September 19 to submit them.
The case has been set for argument the first week in November.
The Trump Administration asked the justices last week to quickly overturn a split decision by a federal appeals court that ruled the President could not impose the import taxes under a 1977 law that grants him emergency powers over the economy.
The tariffs have been the central feature of the tumultuous trade war that has defined Trump’s second term, creating wide-ranging and unpredictable effects for businesses and consumers alike as the President has repeatedly announced – then paused or modified – levies on goods from other nations.
Trump has argued tariffs will help end the fentanyl crisis, rebuild American manufacturing and save jobs, but the moves have unsettled investors and stoked concerns about the US economy and inflation.
The case, which has been on a fast track through the courts, is among the most significant to date involving Trump to reach the justices.
It’s a major test of Trump’s assertion of sweeping executive authority.
The Administration has largely been successful in a flood of cases on the high court’s emergency docket, persuading the justices to allow it to strip migrants of deportation protections, fire heads of federal agencies and freeze grants while legal challenges play out regarding actions in the lower courts.
Unlike those cases, which resulted in temporary rulings, the high court is likely to make a more lasting decision on the legality of Trump’s tariffs because the case concerns a lower court’s ruling that the tariffs were illegal. That decision was later stayed by an appeals court.
Trump began imposing tariffs in February, declaring a series of emergencies under the International Emergency Economic Powers Act (IEEPA), which allows the president to take steps “to deal with any unusual and extraordinary threat” to the economy from abroad by declaring an emergency.
Trump is the first president to assert such an authority in the nearly 50-year history of the IEEPA.
Trump announced levies of 10 to 25% on goods from China, Mexico and Canada for allegedly failing to stem the flow of fentanyl and other illegal drugs into the US. In April, Trump imposed a universal 10% import tax on all trading partners and higher rates on roughly 60 countries, dubbing it “Liberation Day”.
Trump wrote in the latter executive order that “large and persistent” US trade deficits constitute “an unusual and extraordinary threat to the national security and economy of the US”. He has consistently said other countries have imposed unfair trade barriers that have contributed to the hollowing out of America’s industrial base.
As of early August, the Yale Budget Lab said the effective tariff rate on imports was nearly 19% – the highest since the Great Depression.
The typical tariff rate has hovered between 2 and 3% in the modern era. The non-partisan group estimated price increases caused by the tariffs could cost American households US$2400 per year.
A handful of small businesses and a group of states filed separate lawsuits against the tariffs in April, saying they would cause widespread economic harm. The small businesses called Trump’s imposition of worldwide tariffs a “power grab”.
The plaintiffs argued that the IEEPA does not grant the President the authority to impose tariffs, that there is no national emergency warranting Trump’s actions, and that his moves violate the Constitution’s separation of powers and run afoul of the Supreme Court’s “major questions doctrine”.
The doctrine, which the high court established in a 2022 case dealing with the Environmental Protection Agency’s ability to regulate greenhouse gases, requires that a president have explicit authorisation by Congress to regulate issues of great economic or political significance.
The Supreme Court cited the principle to block President Joe Biden’s US$400 billion in student loan forgiveness, attempts to curb carbon dioxide emissions, and impose vaccine mandates on some businesses during the pandemic.
“President Trump has chosen to wield IEEPA to impose tariffs on the world at his whim, muddled by threats, additions, exceptions, exemptions, and pauses,” the states wrote in their lawsuit. “The direct consequence has been an erratic financial market and a destabilised US and global economy.”
A three-judge panel of the specialised Court of International Trade in New York issued a summary judgment in the small-business and state cases in May, finding that Trump did not have the authority to impose trafficking tariffs or the worldwide import taxes under the IEEPA.
“We do not read IEEPA to delegate an unbounded tariff authority to the President,” the panel found. “We instead read IEEPA’s provisions to impose meaningful limits on any such authority it confers.”
The US Court of Appeals for the Federal Circuit then paused that decision and agreed to hear a government appeal on an expedited basis. Last month, the court ruled 7-4 that Trump had overstepped his authority in imposing tariffs under the IEEPA.
The court paused its ruling to give the Trump Administration time to appeal to the Supreme Court.
“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,” the majority wrote in their ruling. “Absent a valid delegation by Congress, the President has no authority to impose taxes.”
Trump officials have said in interviews and court filings that an adverse ruling by the high court could force the Administration to refund up to US$1 trillion in tariffs it has collected, if the justices were to issue a decision by June.
Administration officials want the court to act much sooner to avoid such a scenario. Solicitor-General John Sauer also urged the court to act quickly because of the enormous implications for the US economy.
“The stakes in this case could not be higher,” Sauer wrote in a court filing.
“The President and his Cabinet officials have determined that the tariffs are promoting peace and unprecedented economic prosperity, and that the denial of tariff authority would expose our nation to trade retaliation without effective defences and thrust America back to the brink of economic catastrophe.”
Financial experts have warned the economy is showing signs of a possible slowdown amid weak job growth and strong inflation.
Separately, the Supreme Court will consider whether to accept a second case challenging Trump’s tariffs at the end of September. That lawsuit was brought by two educational toy makers, who claim the tariffs will force them to raise prices and could devastate sales.
Since announcing the tariffs, Trump has negotiated frameworks for trade deals with about a dozen countries and the European Union to scale back the import taxes. An adverse ruling could also upend those negotiations.
Even if the President loses at the high court, he could impose similar tariffs using authorities under other trade laws, but that would take time and require the Government to complete various procedural steps. The Trump Administration is reportedly exploring its options.
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