The US Supreme Court’s tough questioning of US President Donald Trump’s global tariffs fueled increased speculation that they would be struck down, but raised the specter of additional chaos as he is widely expected to shift to other trade tactics in the wake of an adverse ruling.
On Wednesday during oral arguments, Supreme Court justices cast doubt on Trump’s authority to impose tariffs under the 1977 International Emergency Economic Powers Act (IEEPA), which contains no references to tariffs — only language on regulating imports during national emergencies declared by the US president.
Three conservative justices raised questions about whether an emergency law gives Trump near-limitless power to set and change duties on imports, with potentially trillion-dollar implications for the global economy. The court’s three liberal justices also appeared dubious, so at least two conservative votes could limit Trump’s tariff power under the law.
Photo: Reuters
Justice Neil Gorsuch, who Trump nominated to the court in 2017, appeared concerned that Trump’s assertion that he could impose tariffs by declaring a national emergency could shift too much congressional power to the president on an issue that helped spark the American Revolution.
“It’s a one-way ratchet toward the gradual, but continual accretion of power in the executive branch and away from the people’s elected representatives,” he said, later suggesting the “power to reach into the pockets of the American people” must be “done locally, through our elected representatives.”
Chief Justice John Roberts raised questions about whether the emergency-power law allowed for tariffs on “any product, from any country, in any amount, for any length of time.”
Justice Amy Coney Barrett, also a Trump nominee, pressed the government on the broad range of Trump’s action.
“Spain? France? I mean, I could see it with some countries, but explain to me why as many countries needed to be subject to the reciprocal tariff policy,” she said.
“Based on the questions posed by the justices, the IEEPA tariffs appear to be in jeopardy,” said Damon Pike, a principal with BDO USA’s customs and trade services practice.
All the court’s justices, except Samuel Alito and Clarence Thomas, “seemed skeptical that IEEPA gives President Trump the power to levy unlimited tariffs on every product imported from every country around the world,” he added.
However, Pike said that if the Trump administration loses, it would simply invoke other trade laws, a view widely shared by trade lawyers, senior Trump administration officials, importing companies and analysts.
The groups had just started to get used to the idea of a somewhat more stable trade environment, bolstered by a new year-long US-China trade truce and more US deals with Southeast Asian countries that reduced the IEEPA tariff rates to more manageable levels.
Companies have clamored for certainty and predictability on tariffs so that they can plan their investments, but Conference Board policy executive David Young said he did not see relief in sight.
“We’ve still got no clarity — CEOs remain kind of precariously positioned around what the future looks like,” said Young, who briefed about 40 CEOs following the Supreme Court arguments. “Even if it goes against IEEPA, the uncertainty still continues.”
A ruling is unlikely before early next year, he said, and companies are totally in the dark about potential refunds of the more than US$100 billion in IEEPA tariffs paid so far if Trump loses.
The issue of refunds was raised by Barrett, who said that it “could be a mess” for the courts to administer refunds to US importers who have paid tariffs that were declared illegal.
Neal Katyal, a lawyer representing five small businesses challenging the tariffs, said that the firms would get their refunds automatically if the court ruled against the Trump administration, but all other companies would have to lodge administrative protests to get money back.
“It’s a very complicated thing” that could take a long time, he added.
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