On Tuesday, the Supreme Court announced it will deliberate on whether President Trump possesses the authority to implement his most extensive tariffs, marking a significant examination of a key element of his economic agenda. The high court has agreed to review decisions made by lower courts, which found that President Trump lacked the legal authority to impose many of his global tariffs under an emergency powers statute.
The Justice Department appealed one of these rulings from a federal appeals court to the Supreme Court last week, urging the court to act promptly. The Trump administration contends that upholding the lower court's decision would disadvantage the United States and expose the country to retaliatory trade measures from other nations.
This case presents the first instance in which the Supreme Court will directly address the legality of a policy enacted during President Trump's second term. Historically, the justices have been asked to intervene in challenges to various presidential initiatives, though often on a temporary basis. The Supreme Court has scheduled oral arguments for the tariffs case for the first week of November.
The litigation was initiated by a coalition of small businesses and twelve states, who argue that President Trump does not possess the authority to impose numerous global tariffs under the International Emergency Economic Powers Act (IEEPA) that he invoked. In May, a federal trade court ruled that the President overstepped his authority with the tariffs issued under IEEPA, a decision that was upheld by the Federal Circuit late last month.
The Federal Circuit court, in a 7-4 decision, concluded that the tariffs imposed by President Trump were illegal. The court noted that it seemed improbable Congress intended to grant the President unlimited tariff authority when enacting IEEPA. They pointed out that the statute neither explicitly mentions tariffs nor incorporates procedural safeguards that would limit the President's power to impose them.
Another significant aspect of the case involves two Illinois-based companies that sell educational toys and products. In May, a federal district judge in Washington, D.C., determined that IEEPA does not grant the President the authority to impose these tariffs. This ruling from U.S. District Judge Rudolph Contreras was narrower, only prohibiting the Trump administration from collecting tariffs from these two companies while the Justice Department pursued an appeal to the D.C. Circuit.
The tariffs in question include those announced by President Trump in early April, which he dubbed "Liberation Day." This policy established a baseline tariff rate of 10% on nearly all countries, alongside higher reciprocal tariffs on numerous U.S. trading partners. The tariffs also target imports from Canada, Mexico, and China, which the President claims failed to address the trafficking of fentanyl across U.S. borders.
Throughout his presidency, Trump has utilized tariffs and the threat of additional duties as leverage to compel trading partners to negotiate favorable trade agreements. To date, he has announced preliminary frameworks for trade agreements with the European Union as well as six other nations: the United Kingdom, Japan, South Korea, Vietnam, Indonesia, and the Philippines.
President Trump is the first U.S. President to use IEEPA to impose tariffs, although previous administrations have employed the act to enforce economic sanctions against foreign nations. The Trump administration maintains that denying the President tariff authority could lead the country into economic chaos, significantly worsening the nation's financial standing.
Solicitor General D. John Sauer emphasized the need for the Supreme Court to act quickly, arguing that the Federal Circuit's decision has disrupted critical, sensitive diplomatic trade negotiations and introduced legal uncertainty regarding the President's strategies to protect the nation from potential economic crises.
The Trump administration asserts that IEEPA bestows broad powers upon the President to regulate trade, including the imposition of tariffs, to address unique and extraordinary threats to national security, foreign policy, or the economy. President Trump has identified trade deficits and the influx of fentanyl into the U.S. as significant threats, prompting his invocation of IEEPA to impose tariffs aimed at mitigating these issues.
Despite the ongoing legal battles, Trump's tariffs remain in effect as the Federal Circuit has suspended its ruling until October 14, allowing time for the administration to appeal to the Supreme Court. The plaintiffs, comprising small businesses and states, have collectively agreed on the necessity for the Supreme Court to resolve the legality of Trump’s tariffs, deeming it a matter of substantial importance.
The plaintiffs argue that the tariffs are unlawful and have urged the Supreme Court to uphold the Federal Circuit's ruling. They contend that the government’s interpretation of IEEPA grants the President unlimited power to impose tariffs at will, based solely on declarations of an economic emergency. In their court filings, they assert that such a broad interpretation poses a significant risk of unchecked authority.
Moreover, the states argue that the Constitution allocates the power to levy taxes solely to Congress, contending that the Trump administration's claims of expansive tariff authority undermine this fundamental principle. They highlight the chaotic implementation of these policies, which have fluctuated and caused considerable disruption in financial markets and the broader economy.
The legal challenge to President Trump’s tariffs is poised to be one of several significant cases involving his second-term policies that the Supreme Court may consider. Other legal issues related to his immigration policies and attempts to alter the structure of independent agencies are also progressing through the lower courts, with the administration likely to seek Supreme Court review of decisions unfavorable to its position.
