Court Tests Trump's Tariff Power: Executive Authority on Trial

The U.S. Supreme Court has agreed to hear a high-profile case concerning the legal authority of President Donald Trump to impose a broad set of tariffs under the International Emergency Economic Powers Act (IEEPA), with oral arguments scheduled for early November. The decision follows two consolidated cases involving challenges from small businesses and states, which argue that the tariffs exceed executive powers and encroach on legislative authority. The rulings in lower courts had previously struck down the tariffs as unlawful, with the U.S. Court of Appeals for the Federal Circuit affirming a 7-4 decision that the IEEPA does not provide sweeping power for such measures.

The tariffs in question include both “reciprocal tariffs,” which apply a minimum of 10% (up to 50%) on goods from nearly all countries, and the “trafficking tariffs,” targeting Canada, China, and Mexico over fentanyl-related concerns. The administration contends that these measures are necessary to address national emergencies and restore fair trade practices, with U.S. Solicitor General D. John Sauer asserting that the tariffs have “pulled America back from the precipice of disaster” and have encouraged foreign investment. However, the plaintiffs challenge the legality of these actions, emphasizing that the Constitution delegates tariff-setting powers to Congress and that IEEPA lacks the specificity required to justify such sweeping executive action.

The legal battle began when two small educational supply companies, Learning Resources and hand2mind, filed a lawsuit challenging the tariffs in Washington, D.C. In May, a federal district judge ruled the IEEPA tariffs unlawful, blocking enforcement against these businesses. The Trump administration appealed the decision, but the Supreme Court initially denied a request to expedite the process. Meanwhile, a separate group of seven small businesses and a coalition of 12 states, including Oregon, filed their own challenges, which were upheld by the Court of International Trade and later the Federal Circuit in an 8-2 decision.

The Trump administration has warned of significant financial implications if the court rules in favor of the challengers, estimating refunds of between $750 billion and $1 trillion in collected tariffs. This underscores the high stakes of the case, particularly for the Treasury Department and the broader economy. The administration has argued that the tariffs are essential for national security and economic stability, asserting that delaying a decision could leave the government in a difficult financial position.

Legal experts are closely watching how the Court’s 6-3 conservative majority will approach this case. While the high court has often supported Trump’s legal positions, it has also shown skepticism regarding expansive executive authority, especially when it comes to policies not explicitly outlined in enabling legislation. This is particularly relevant given the Court’s past rejection of the Biden administration’s use of IEEPA for executive actions in other contexts, such as student loan forgiveness. The outcome of this case could set a significant precedent on the limits of presidential power in trade policy and emergency economic measures.

The Supreme Court has directed the Trump administration to submit its opening brief on Sept. 19, with the challengers’ responses due on Oct. 20. The court will hear one hour of oral arguments during the first week of the November 2025 argument session, which begins on Nov. 3. A ruling is expected after the argument session concludes, with the potential to shape the future of U.S. trade policy and executive authority for years to come.