The Supreme Court and Trump’s tariffs: an explainer

When the justices meet for their “long conference” on Sept. 29, one of the cases that they will consider is a challenge to the tariffs that President Donald Trump has imposed in a series of executive orders since his inauguration. The small businesses that filed the case told the court that the “tariffs are projected to amount to an average tax increase of $1,200-$2,800 per American household in 2025.”

Even if the justices don’t take up the tariff question at that conference, they are likely to do so soon. Here’s a brief explainer on two of the most prominent tariff cases and the issues involved.

How did the dispute over the tariffs start?

Beginning in February, Trump issued a series of executive orders imposing tariffs. The tariffs can be divided into two categories. The first type, known as the “trafficking” tariffs, targeted products of Canada, Mexico, and China because Trump says those countries have failed to do enough to stop the flow of fentanyl into the United States. The second category, known as the “worldwide” or “reciprocal” tariffs, imposed a baseline tariff of 10% on virtually all countries, with higher tariffs – anywhere from 11% to 50% – on dozens of countries. In imposing the worldwide tariffs, Trump cited large trade deficits as an “unusual and extraordinary threat to the national security and economy of the United States.”

One case, which will be considered by the court at its long conference, was filed in the U.S. District Court for the District of Columbia by Learning Resources and hand2mind, two small, family-owned companies that make educational toys, with much of their manufacturing taking place in Asia. To survive, the companies say, they would have to raise their prices by at least 70% to offset the highest tariffs.

Another case challenging the tariffs was brought in the U.S. Court of International Trade by several small businesses, including V.O.S. Selections, a New York wine importer, and Terry Precision Cycling, which sells women’s cycling apparel. Terry describes the tariffs as “an existential threat” to the company.

What are the laws at the center of the dispute over the tariffs?

Article I of the Constitution gives Congress the power to “lay and collect Taxes, Duties, Imposts and Excises,” and it requires that “Bills for raising Revenue shall originate in the House of Representatives.”

In issuing the executive orders that imposed the tariffs, Trump relied primarily on a 1977 law, the International Emergency Economic Powers Act. Section 1701 of IEEPA provides that the president can use the law “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States,” if he declares a national emergency “with respect to such threat.” Section 1702 of the act provides that, when there is a national emergency, the president may “regulate … importation or exportation” of “property in which any foreign country or a national thereof has any interest.”

Has the Supreme Court addressed this question?

The Supreme Court has not weighed in on the president’s power to impose tariffs under IEEPA. United States v. Yoshida International, a 1975 decision by the U.S. Court of Customs and Patent Appeals, is perhaps most relevant to the current tariff debate because of the similarities between IEEPA and the text of the law at the center of that case, the Trading with the Enemy Act of 1917.

That case began as a challenge to then-President Richard Nixon’s imposition of a 10% temporary tariff on imports in response to a large trade deficit, which in 1971 was a relatively unusual development in U.S. history. In 1974, the U.S. Customs Court – the predecessor to the Court of International Trade – ruled that Nixon did not have the power under the Trading with the Enemy Act, which allowed the president in the case of an emergency to “regulate … the importation … of … any property in which any foreign country or a national thereof has any interest.”   

In response to the ruling by the Customs Court, a provision of the Trade Act of 1974 specifically gave the president the power to impose tariffs to “deal with large and serious United States balance-of-payment deficits,” but – at the same time – the law limited tariffs to a maximum of 15% and a duration of five months.

The Court of Customs and Patent Appeals reversed the decision of the Customs Court, concluding that Nixon had the authority to impose the tariffs after all. The 10% tariff, the court explained, was a “limited” one imposed “as ‘a temporary measure’ calculated to help meet a particular national emergency, which is quite different from ‘imposing whatever tariff rates he deems desirable.’”

What are the challengers’ arguments?

The challengers in both cases contend that IEEPA doesn’t mention tariffs, and that no president before Trump has ever relied on IEEPA to impose tariffs. Even if IEEPA did allow the president to impose tariffs in some circumstances, they add, doing so requires a “national emergency,” and the tariffs must address an “unusual and extraordinary threat” to the “national security, foreign policy, or economy of the United States.” But trade deficits have existed for decades and are hardly an emergency, the challengers emphasize.

Interpreting IEEPA to give the president the power to impose unilateral worldwide tariffs would create a variety of constitutional problems, the challengers before the Federal Circuit argue. For example, if the power to “regulate” allowed the president to impose taxes, it would give the president “vast taxing powers that no President in U.S. history has ever been understood to have.” But such a delegation would run afoul of a doctrine known as the major questions doctrine, they say, which requires Congress to be explicit when it wants to give the president this kind of power.

The challengers also argue that the 1975 decision in Yoshida International supports their position. Although the Court of Customs and Patent Appeals upheld Nixon’s tariffs in that case, they acknowledge, that does not give Trump the same authority under IEEPA. To the contrary, they contend, IEEPA’s history makes clear that Congress enacted the law because it believed that the Court of Customs and Patent Appeals had interpreted the Trading with the Enemy Act too broadly, and it wanted to narrow the scope of the president’s power.

What are the government’s arguments?

The Trump administration counters that the tariffs fall squarely within the text of IEEPA. “The plain meaning of ‘regulate’ includes the imposition of tariffs as a way to adjust or control imports,” it writes. And the “trafficking” tariffs “deal with” the threat because, by putting pressure on other countries to address the fentanyl crisis, they are “reasonably related” to the change in behavior that the executive orders seek to bring about.

The government also points to the role that the tariffs have played in providing an incentive for other countries to come to the bargaining table with the United States. If the tariffs are lifted, the government says, it would “disrupt the Executive Branch’s ongoing, sensitive diplomatic negotiations with virtually every major trading partner.”

And the government insists that Yoshida International supports its position, rather than the challengers’. The Court of Customs and Patent Appeals, the government contends, interpreted the Trading with the Enemy Act to allow the Nixon administration to impose “an import duty surcharge.” “Congress,” the government emphasizes, “drew IEEPA’s language directly from TWEA, after Yoshida had read that language to authorize tariffs.”

How have the lower courts ruled on these cases?

In the case brought by V.O.S. Selections and the other small businesses, the CIT on May 28 ruled for both the small businesses as well as a group of states that had challenged the tariffs, and it set aside the tariffs. The CIT reasoned that IEEPA’s delegation of power to “regulate . . . importation” does not give the president unlimited tariff power. The limits that the Trade Act sets on the president’s ability to react to trade deficits, the court continued, indicates that Congress did not intend for the president to rely on broader emergency powers in IEEPA to respond to trade deficits.

The “trafficking” tariffs are also invalid, the CIT continued, because they do not “deal with an unusual and extraordinary threat,” as federal law requires. Instead, the CIT concluded, Trump’s executive order tries to create leverage to deal with the fentanyl crisis.

The U.S. Court of Appeals for the Federal Circuit, which hears appeals from the Court of International Trade, put the CIT’s ruling on hold while the government appealed. It fast-tracked the government’s appeal, with the full court – all 11 judges – hearing arguments on July 31. A decision could come at any time, and the losing party could then seek review by the Supreme Court.

In the case in federal court in the District of Columbia, U.S. District Judge Rudolph Contreras ruled for Learning Resources and hand2mind, agreeing with them that “the power to regulate is not the power to tax.” Contreras’ order was a narrow one, barring the government only from enforcing the tariffs against Learning Resources and hand2mind, and he put that decision on hold while the government appealed.

Learning Resources and hand2mind went to the Supreme Court on June 17, asking the justices to review the case without waiting for the U.S. Court of Appeals for the District of Columbia Circuit to rule on the government’s appeal – a procedure known as seeking “cert before judgment.” The companies told the Supreme Court that it will “inevitably” have to weigh in on whether the tariffs are legal. And the challenges to the tariffs should move forward quickly, they said, because “of the tariffs’ massive impact on virtually every business and consumer across the Nation, and the unremitting whiplash caused by the unfettered tariffing power the President claims.”

The companies also asked the Supreme Court to fast-track its consideration of their petition so that the court could rule on their request before the justices’ summer recess, but it declined to do so. Instead, the justices will consider the companies’ petition for review at their private conference on Sept. 29; we could learn whether the justices will take up the case as soon as that week.

The Trump administration urged the court to stay out of the dispute at this point. Among other things, it argued, the district court does not have the power to hear the case – which instead belongs in the CIT – and both the D.C. Circuit and the Federal Circuit have “highly expedited” their consideration of the government’s appeals.

Is the Supreme Court likely to take up one or both of the cases? And if so, when?

There is no way to know exactly when the Federal Circuit is likely to issue its decision, but the losing side – whether the Trump administration or the companies – is likely to go to the Supreme Court, asking the justices to weigh in. In its brief opposing review in the case brought by Learning Resources and hand2mind, the Trump administration suggested that the case brought by V.O.S. Selections would be a more appropriate one for the court to take up a challenge to the legality of Trump’s tariffs given that, according to the government, of the two cases only it was brought in the proper court.

Most court watchers believe that there is a good chance that the Supreme Court will agree to rule on the tariff question raised in at least one of the cases, and it could issue a decision by next summer.