The Supreme Court witnessed intense scrutiny of President Donald Trump’s extensive tariffs on Wednesday, in a case that could significantly affect the president’s policy agenda and the worldwide economy.
Several justices, including a number of conservatives, showed skepticism towards the administration’s rationale for the import duties, which the president has claimed are vital for revitalizing America’s manufacturing sector and addressing its trade deficit.
These measures are contested by various small businesses and a coalition of states, arguing that the president has exceeded his authority by enforcing these levies, which functionally amount to a tax.
The Supreme Court, boasting a 6-3 conservative majority, typically takes a lengthy period to make significant rulings, but many anticipate a quicker resolution in this instance, regarded as a pivotal test of the Trump administration’s efforts to broaden presidential powers.
“Is your argument that every country required tariffs due to threats against national defense and industrial capacity? I mean, Spain? France?” queried Amy Coney Barrett, appointed by Trump.
“I can understand it for certain countries, but clarify why so many are subject to the reciprocal tariff strategy.”
Trillions of dollars in tariff collections are on the line. Should the Trump administration fail, the federal government may need to refund billions collected, a situation Barrett remarked could devolve into a “total disaster”.
The administration, represented by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer at the hearing, indicated plans to explore alternate tariff powers if the court rules unfavorably.
“The White House is always ready with a backup plan,” stated White House press secretary Karoline Leavitt prior to the hearing.
Following the hearing on Fox News, Trump remarked that he believed the day’s proceedings were favorable.
He expressed that a loss in the case would be “devastating” for the nation, describing it as “one of the most critical cases in our country’s history”.
Debates over ‘nation-threatening’ emergencies
The case revolves around a law from 1977, the International Emergency Economic Powers Act (IEEPA), which grants the president the authority to “regulate” trade during emergencies.
Trump first cited IEEPA in February to impose taxes on imports from China, Mexico, and Canada, asserting that drug trafficking constituted an emergency.
He invoked it again in April, mandating tariffs ranging from 10% to 50% on goods from nearly every nation globally, claiming that the US trade deficit represented an “extraordinary and unusual threat”.
These tariffs were rolled out in an inconsistent manner over the summer while the US encouraged countries to negotiate “agreements”.
The Trump administration contends that the authority to regulate encompasses the power to implement tariffs and that the country faced distinct crises deemed “nation-threatening and unsustainable,” justifying the president’s emergency response.
Solicitor General John Sauer, defending the administration, cautioned that if Trump’s tariff powers were declared illegal, it would subject the US to “merciless trade retaliation,” resulting in “damaging economic and national security repercussions.”
Consequences of the ruling
The inquiries from the justices indicated they were grappling with the future implications of a decision favoring the administration.
“The rationale being presented could justify imposing tariffs on any product from any country at any rate, indefinitely,” Chief Justice John Roberts stated.
According to the Constitution, the United States’ foundational legal text, it is Congress, not the president, that wields the power to tax, with the court historically enforcing restrictions on the extent of that authority that may be delegated.
If the Supreme Court backs Trump in this ruling, Judge Neil Gorsuch, another conservative, posed the question: “What would stop Congress from completely relinquishing its responsibility to supervise international commerce?”
He further remarked that he was “struggling” to find justification for Sauer’s position.
“Could the president impose a 50% tariff on gasoline vehicles and auto parts as a remedy for the extraordinary and unusual threat posed by climate change from abroad?” he inquired.
Tariffs vs. taxes
Attorneys representing the challenging states and private entities contend that the law does not specifically mention “tariffs” and argue that Congress never intended to provide the president with an “unlimited power to dismantle” current trade arrangements and tariff guidelines.
Neil Katyal, advocating for private businesses, argued that while the law did confer the president the power to halt trade through embargoes or quotas, imposing revenue-generating tariffs crossed a line.
The justices allocated relatively minimal time discussing refunds or the appropriateness of the president’s emergency declarations.
Their emphasis was on the language of IEEPA and its historical context. Although past presidents have frequently applied it to enforce sanctions, Trump is the first to utilize it for tariffs.
Sauer implored the justices to interpret tariffs as a logical extension of the powers granted to the president under the statute instead of being a tax.
“I can’t emphasize this enough – it is a regulatory tariff, not a tax,” he asserted.
At another point, he claimed that the revenue aspect was merely “incidental,” despite the president’s frequent claims regarding funds collected via tariffs.
The differentiation between tariffs and taxes seemed to pose a challenge for many justices.
“You seek to argue that tariffs are not taxes, yet that is fundamentally what they are,” remarked Justice Sonia Sotomayor.
Other justices expressed hesitation about placing restrictions, particularly concerning national security and foreign policy.
Justice Brett Kavanaugh articulated that it didn’t seem to make “common sense” to empower the president to restrict trade but not to impose a 1% tariff.
Audience reactions
This case could have consequences for approximately $90 billion worth of import duties already settled, amounting to about half of the tariff income collected by the US until September this year, according to Wells Fargo analysts. Trump officials cautioned that this figure could soar to $1 trillion if the court takes until June to rule.
The proceedings attracted a full audience and extended over three hours, significantly longer than the official time designated for arguments.
If a majority of the Supreme Court sides with Trump, it will nullify the decisions made by three lower courts that previously ruled against the administration.
Sarah Wells, the CEO and founder of Sarah Wells Bags, was present on the court steps with a group of fellow small business proprietors who followed the arguments closely.
Her firm, which specializes in designing bags for breast pumps and similar products manufactured abroad, encountered approximately $20,000 in unexpected tariffs earlier this year, leading them to cease importing goods while attempting to adjust their supply chain. She has sold out her inventory, paused product development, and reduced her staff.
However, she noted that she was encouraged by what she learned during the proceedings.
“I felt that they genuinely grasped the overreach that I believe the president has executed under IEEPA,” she remarked. “I sensed they are aware that this situation needs to be controlled.”
