For opponents of Trump's tariffs, there were plenty of encouraging signs Wednesday that President Donald Trump's tariffs could be cut as part of a future Supreme Court ruling over the next few months.
Oral arguments in the consolidated case brought to the high court by two dozen Democratic-led states and a number of private firms lasted two and a half hours. The crux of the matter is whether President Donald Trump correctly used the nation's emergency law to impose double-digit tariffs on most foreign governments.
In its statement, the Trump administration argued that it did so because a “large and persistent” trade deficit created an emergency that justified the import taxes.
However, most Supreme Court justices did not believe what the administration was selling. Observers at Wednesday's meeting said many raised thorny questions about Trump's ability to shut down Congress and impose tariffs at will.
“If I were the Trump administration, I would be burning oil at night for the next few weeks putting together tariff backup plans,” said Peter Harrell, a former Biden administration economist and international trade lawyer. wrote on social networks. “A clear majority of the justices are skeptical that IEEPA will authorize the type of broad-based tariffs that Trump approved this year.”
Attorney John Sauer argued that Congress did intend to delegate these powers to the president under the International Emergency Economic Powers Act, which is the legal mechanism for setting tariffs. But the law never specifically mentions tariffs, and no president has enforced it as aggressively as Trump. Justices Neil Gorsuch and Amy Comey Barrett insisted on Sauer's separation of powers.
“It’s a universal phenomenon,” Barrett said. “So you're saying that every country should have imposed tariffs because of threats to its defense and industrial base? I mean Spain? France?
At times, Bauer seemed to contradict the president's public statements on tariffs. Bauer said they were intended as “regulatory tariffs” that opened up new markets for American companies and were most effective when they weren't paid at all.
Justice Sonia Sotomayor, a liberal justice, opposed this argument. “It is the prerogative of Congress, not the president, to levy taxes,” she said. “And you want to say that tariffs are not taxes, but that’s exactly what they are.”
Trump sees tariffs as a way to restore US wealth and reduce the national debt. At an event in Florida hours after oral arguments ended, the president boasted that the tariffs had raised “hundreds of billions of dollars.”
“To make a big part of your argument by saying, ‘Well, no, the revenue is just a windfall,’ doesn’t fit with what was in the brief or with the way the administration actually talks about policy,” Erica York, vice president of federal tax policy at the right-leaning Tax Foundation, told Quartz.
In addition, Sauer admitted that the duties were paid by the Americans. “Sometimes they were paid by a foreign manufacturer. Sometimes the costs were paid by the importer,” Sauer said. “The importer can be an American or a foreign company. It is often a wholly American-owned subsidiary of a foreign corporation.”
The plaintiffs argued that Trump exceeded his authority by unilaterally crafting a new global tariff regime from scratch. “They impose tariffs around the world in peacetime,” said Neil Katyal, a lawyer who represents private American companies. “They assert power that no president has had in our history.”
The High Court did leave many gaps regarding the future decision. Perhaps the Trump administration can be ordered return at least part of the fees collected in accordance with this law.
Such a decision could go either way: the High Court could seek relief only for the named plaintiffs in the suit or for each US importer who had to pay import taxes.
