Court appears dubious of Trump’s tariffs

Updated on Nov. 6 at 3:37 p.m.

The Supreme Court on Wednesday seemed skeptical of President Donald Trump’s authority to impose sweeping tariffs in a series of executive orders earlier this year. During more than two-and-a-half hours of oral arguments, a majority of the justices appeared to agree with the small businesses and states challenging the tariffs that they exceeded the powers given to the president under a federal law providing him the authority to regulate commerce during national emergencies created by foreign threats.  

The law at the center of the case is the International Emergency Economic Powers Act. Enacted in 1977, the president can invoke it “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.” Under Section 1702 of the law, 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.” 

Relying on IEEPA, Trump issued a series of executive orders, beginning in February, that imposed two sets of tariffs. One set, often referred to as the “trafficking” tariffs, targeted products from China, Canada, and Mexico, which, Trump says, have not done enough to stop the flow of fentanyl into the U.S. A second set, known as the “reciprocal” tariffs, imposed an initial tariff of 10% on imports from almost all countries and even higher tariffs on products from dozens of countries. In imposing the reciprocal tariffs, Trump pointed to large trade deficits as an “unusual and extraordinary threat to the national security and economy of the United States.” 

The dispute before the court on Wednesday stems from three challenges to the tariffs. Two different groups of small businesses, alleging that they face serious economic harm from the tariffs, filed lawsuits in the U.S. District Court for the District of Columbia and the U.S. Court of International Trade. A group of 12 states, led by Oregon, also brought a lawsuit in the Court of International Trade. The states’ lawsuit was joined with the case brought there by the small businesses. 

The challengers contended that Trump did not have the power under IEEPA to impose the tariffs. The lower courts agreed, and in September the Supreme Court agreed to take up the dispute and fast-track it. 

Representing the Trump administration, U.S. Solicitor General D. John Sauer began by emphasizing the basis for the president’s decision to impose the tariffs. He said that Trump had “determined that our exploding trade deficits had brought us to the brink of an economic and national security catastrophe,” and “that the traffic of fentanyl and other opioids into our country has created a public health crisis, taking hundreds of thousands of American lives.” Sauer told the justices that IEEPA “confers major powers to address major problems on the President, who is perhaps the most major actor in the realm of foreign affairs.” “The phrase ‘regulate … importation,’” he added, “plainly embraces tariffs, which are among the most traditional and direct methods of regulating importation.”

Neal Katyal, representing the small businesses, countered that the decision “comes down to common sense. It’s simply implausible,” he said, “that in enacting IEEPA Congress handed the President the power to overhaul the entire tariff system and the American economy in the process” – as evidenced by the fact that no other president in nearly 50 years “has ever tried to impose tariffs” relying on that law. 

Indeed, Katyal insisted, “Congress knows exactly how to delegate its tariff powers. Every time for 238 years, it’s done so explicitly, always with real limits.” And if Trump prevails in this case, Katyal cautioned, “another president could declare a climate emergency and impose huge tariffs without fines or without floors or ceilings.”

Sauer faced a barrage of questions from the court’s liberal justices. Justice Elena Kagan, for example, emphasized that Congress – not the president – had “the power to impose taxes, the power to regulate foreign commerce.”

Sauer countered that the president’s authority under IEEPA came from what he described as “two layers”: the president’s broad constitutional powers over foreign policy and foreign relations, “and layered on top of that is a sweeping delegation of authority from Congress.” Those two layers combined, he said, reflected a recognition that the president has “inherent powers to address international emergencies,” and IEEPA gave him the “tools” to do so. Sauer also insisted that the president, in imposing the tariffs, was not exercising a power to tax; instead, he said, the tariffs were simply “regulatory.”

Justice Sonia Sotomayor was unconvinced by the latter argument. “It’s a congressional power, not a presidential power, to tax,” she told Sauer. “And you want to say tariffs are not taxes, but that’s exactly what they are. They’re generating money from American citizens, revenue.”

Justice Ketanji Brown Jackson pointed to what she described as the purpose of IEEPA, noting that the law “was designed and intended to limit presidential authority, that Congress was concerned about how presidents had been using the authority under the predecessor statute,” the Trading with the Enemy Act. “So it seems a little inconsistent,” she said, “to say that we have to interpret a statute that was designed to constrain presidential authority consistent with an understanding that Congress wanted the President to have essentially unlimited authority.” 

Additional skepticism came from Justice Neil Gorsuch, who raised two related objections to the powers that Trump is claiming. Gorsuch asked Sauer, on Trump’s theory, “what would prohibit Congress from just abdicating all responsibility to regulate foreign commerce, for that matter, [or] declare war to the President?” And a few minutes later, Gorsuch suggested that one problem with reading a law like IEEPA to give the president broad powers would be that it would create a “one-way ratchet toward the gradual but continual accretion of power in the executive branch” because, once the president had such powers, he could veto any effort by Congress to take them back. 

Some of the other conservative justices joined Gorsuch in voicing skepticism. Chief Justice John Roberts, for example, suggested that Trump’s claim of power under IEEPA might violate the “major questions” doctrine – the idea that if Congress wants to grant power to make decisions of vast economic or political significance it must say so clearly. “No one has argued that” the phrase “regulate … importation” gives the president the power to impose tariffs “until this particular case,” Roberts observed. Moreover, he added, “Congress uses” the specific term “tariffs in other provisions but not here.” “And yet,” Roberts said, “the justification is being used for a power to impose tariffs on any product from any country … in any amount for any length of time.”  

Sauer countered that “the point of the statute is to confer major powers to address major questions, which are emergencies” – suggesting that the “major questions” doctrine doesn’t apply. The major questions doctrine is a principle that the executive branch of government cannot act on a major question of economic or political significance without clear guidance from Congress. 

Gorsuch echoed Roberts’ concerns about the application of the “major questions” doctrine, asking Sauer whether a president could “impose a 50-percent tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change.”

Sauer indicated that the Trump administration would “obviously” say that climate change is a “hoax,” but that another president would be able to do so.

Justice Amy Coney Barrett asked Sauer to point to other places in federal law “or any other time in history” where Congress used the phrase “regulate … importation” to give the president the power to impose tariffs. She also pushed back against Sauer’s suggestion that the other verbs in the provision authorizing the president to “regulate … importation” were “capacious,” and therefore should be read broadly. “Because, to me,” she said, “things like ‘nullify’ and ‘void’ have definite meanings.”

But Barrett was also skeptical at times of the challengers’ arguments. Along with Justice Brett Kavanaugh, she pressed Benjamin Gutman, the solicitor general of Oregon, who represented the group of 12 states, about whether IEEPA on the one hand could give the president very broad powers – for example, allowing him to shut down all trade with another country – but on the other would not allow him to take the much smaller step, in her view, of imposing tariffs. Such a paradox, Kavanaugh suggested, created an “odd donut hole” in IEEPA. 

Gutman later responded both that IEEPA gives the president “a range of tools that are more calibrated” than simply imposing a “complete embargo.” Moreover, he added, other trade laws could allow the president to impose tariffs in such a situation.

Kavanaugh also pushed back against the challengers’ emphasis on the absence of the words “tariffs” or “duties” from IEEPA. He pointed to Federal Energy Administration v. Algonquin SNG, a 1976 ruling by the court holding that a federal trade law giving the president the power to “adjust imports” allowed him to impose a licensing-fee scheme on imports of petroleum and petroleum products without mentioning that term. 

Sauer pressed this point as well, telling the justices that in Algonquin the court “directly addressed and rejected the argument that the D.C. Circuit had accepted in that case, which is that when Congress wants to delegate the authority to tariff, it uses a consistently explicit and well-defined approach, which is to use these magic words, tariff, tax, impose, and so forth.” 

A few justices also focused on the portion of IEEPA that gives the president the power to “regulate … importation” by, among other things, “licenses” – which, Gorsuch suggested, might be “economically identical to a tariff.”

Barrett had a similar question, asking Katyal whether the president could “regulate commerce under IEEPA by using a licensing fee.” 

Katyal distinguished between a licensing fee and a license. The latter, he said, would be permissible, while the former would not. “[N]o president,” Katyal stressed, “has ever charged, to my knowledge, fees under” IEEPA and TWEA “for the licenses.” 

Barrett asked Katyal to address what would happen if the challengers prevailed and the tariffs were deemed invalid. In particular, she expressed concern that the process of providing reimbursements for the tariffs that had already been paid would be “a complete mess.”

Katyal stressed that there is a “whole specialized body of trade law” to deal with reimbursements, although he acknowledged that the process is “a very complicated thing.” But he added that the prospect that the reimbursement process could be messy “isn’t a reason [not] to do something.” And he offered the justices several options to take the sting out of the process, noting that they could (for example) put their decision on hold to let Congress step in or rule that their decision would only affect tariffs going forward. “There’s lots of possibilities,” he concluded.

Justice Samuel Alito also seemed sympathetic to the administration’s arguments, telling Katyal that statutes that confer emergency powers are often phrased quite broadly.

Katyal resisted that suggestion. Citing Justice Robert Jackson, he countered that “when you’re in an emergency situation, the statutes actually have to speak with more precision. The public needs to know because emergencies beget emergencies.”

And much like Barrett and Kavanaugh, Alito pressed Katyal about how IEEPA would operate in an emergency, describing a situation in which there is “an imminent threat of war with a very powerful enemy whose economy was heavily dependent on U.S. trade. Could a President under this provision impose a tariff as a way of trying to stave off that war, or would you say no, the President lacks that power under this” law? Alito appeared to believe that the president would have that power. But it was not clear whether Alito had four other votes on his side.

The Trump administration and the challengers have both asked the court to move quickly in deciding the case, but there is no way to know exactly when that will be.