Trump’s Tariffs on Trial: Will the Supreme Court Clip Trump’s Trade Wings?

The United States Supreme Court held a session hearing the oral arguments today in a challenge to President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs.

The cases, Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., present questions on whether the president can declare an “economic emergency” under IEEPA to justify tariffs without explicit congressional authorization.

With lower courts, the Court of International Trade in May and the Federal Circuit in August had already ruled against the administration, finding President Trump exceeded statutory authority. That division makes the outcome uncertain, as a 6-3 conservative majority at the high court includes three justices appointed by Trump, and legal analysts also remain divided on how the court is likely to rule.

Since February, the administration has applied IEEPA-based tariffs, from 10% to 145%, on imports from nearly all trading partners, citing trade imbalances in autos, steel, and consumer goods.

Officials have declared emergencies related to fentanyl trafficking and foreign retaliatory measures, estimating $90 billion in revenue in 2025. Opponents, from small businesses and California officials, argue that IEEPA, passed in 1977 to limit executive overreach post-Vietnam, lacks specific tariff language, a power constitutionally held by Congress.

The IEEPA Dispute: 1975 Precedent vs. 2025 Reality:

The major issue is if IEEPA’s provision to “regulate” commerce during emergencies includes tariffs, which function as import taxes.

The government maintains that the measures are essential to national security and swift negotiations on trade, citing a 1975 appellate ruling in United States v. Yoshida International, where a court equated regulatory authority with the imposition of tariffs.

Trump took to Truth Social to raise the stakes, warning a loss would leave the United States “defenseless” against imports and require billions in refunds to importers.

Federal courts rejected the view, invoking the Supreme Court’s major questions doctrine, which demands clear congressional authorization for executive actions with major economic impact.

In an August 7-4 en banc ruling, the Federal Circuit invalidated specific orders, including the April “Liberation Day” tariffs and duties on Canada and Mexico, while staying enforcement pending appeal.

Tariffs under Section 232 of the 1962 Trade Expansion Act, applicable to steel, aluminum, autos, and related industries, and Section 301 which targets unfair practices, such as those in China, were expressly exempted.

Administration officials express confidence in alternatives. Treasury Secretary Scott Bessent told CNBC the White House has “lots of options,” including extending Section 232 investigations into semiconductors, pharmaceuticals, and critical minerals, or using Section 122 for temporary 15% balance-of-payments tariffs.

Bessent stated the court “has been loath to interfere with signature policies,” though Section 301 pathways require extended investigations that slow execution relative to IEEPA.

Will Ideology Defeat the  Precedent as Conservative Justices in the Hot Seat

Analysts are divided on an outcome, showing a disagreement and division between the court’s conservative wing. Ed Mills at Raymond James said he sees a 50-50 chance, citing judicial deference to the president in matters of foreign policy.

Veda Partners’ Henrietta Treyz estimates a 50-65% chance the court will uphold lower rulings, drawing similarities to major questions used in the 2023 student loan forgiveness case. Pangaea Policy’s Terry Haines sees a slight administration edge but cautions it is “not a slam dunk” and could result in a mixed ruling instead of a complete validation or rejection of tariff authority.

Justices weigh conflicting precedents. A 2025 ruling sustains FCC authority over the Universal Service Fund and strengthens delegations under an “intelligible principle.” Applying major questions here risks accusations of inconsistency, given previous reversals of Biden administration programs.

Justice Brett Kavanaugh’s April concurrence showed exceptions for national security, potentially favoring the president. Also, former Solicitor General Donald Verrilli noted President Trump sees a loss as a personal blow to his legacy.

Stakeholder views remain divided on this matter. California Governor Gavin Newsom urged the court to invalidate and cancel all the tariffs, calling them “extreme and erratic” burdens on the state’s import-heavy economy. European diplomats expect to see the tariffs approved and upheld but think they will be reimposed through other means to maintain leverage in negotiations.

The Hidden Cost of Tariff Victory

If the administration wins this fight, it would further solidify IEEPA as a tariff channel, supporting and advancing President Trump’s reciprocal trade strategy and imposing 10% baseline import duties to secure concessions on United States exports and investments.

The Tax Foundation predicts a $1,200 increase in average household costs for 2025, increasing inflation while supporting infrastructure funding. Industrial interests such as manufacturing executives claim the policies have helped protect industries such as robotics and aviation and continued supply chain migrations out of India and China.

A revisal or defeat would not remove the existing barriers; Section 232 covers more than one-third of imports, but it would limit unilateral moves.

Potential refunds could reach tens of billions of dollars, according to Yale’s Budget Lab, clearing 71% of projected IEEPA revenue. Congress may push for votes on emergency declarations, with House Republicans delaying reforms until January.

Globally, the ruling would moderate Trump’s tariff-based demands on Ukraine aid and fentanyl controls in favor of more deliberate diplomatic channels.

This article was originally published as Trump’s Tariffs on Trial: Will the Supreme Court Clip Trump’s Trade Wings? on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.