A Supreme Showdown

The US Supreme Court will hear arguments this week in cases that will define the scope of presidential authority. At issue in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections is whether the president can invoke the International Emergency Economic Powers Act (IEEPA), a 1977 US law that empowers the executive to use various economic powers “to deal with any unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States”. President Donald Trump has used this authority to place expansive tariffs on all trading partners. The statute further clarifies that presidential authority “may only be exercised to deal with an unusual and extraordinary threat with respect to which a national emergency has been declared”.

The court’s decision could reset the balance of power in Washington. It could expand the president’s exclusive authority to set tariff rates when invoking “national security” or an “emergency”, or restore congressional prerogative and oversight in future global negotiations.

The court faces two fundamental questions:

1. Does IEEPA authorize tariffs?
   The statute empowers the president to “regulate” imports during a declared emergency. This has traditionally meant sanctions and asset freezes, not imposing duties. The US Constitution empowers Congress to set import tariffs, a power that the legislature has partially delegated to the president via explicit statutes.
2. Has there been a violation of the US government’s separation of powers?
   If tariffs fall under IEEPA, critics argue this would amount to an unconstitutional delegation of legislative authority. The court may apply the “major questions” doctrine, requiring explicit congressional approval for actions with sweeping economic impact.

The cases before the court cover two specific “emergencies”. The first is the importing of fentanyl, which has led the Trump administration to impose tariffs on Canada, China, and Mexico. The second is the US trade deficit, to which the White House has responded with “reciprocal tariffs” imposed on all countries. Multiple lawsuits were filed but have been consolidated.

The court will also look at questions concerning the jurisdiction of the Court of International Trade (CIT), as cases have been filed there and in a district court.

The CIT, in a unanimous decision announced on May 28, struck down the tariffs. That court held that IEEPA’s language authorizing the president to “regulate importation” does not confer unlimited tariff authority. The judges emphasized that tariffs are a core congressional power under Article I of the Constitution (“lay and collect Taxes, Duties, Imports, and Excises”). They also applied the major questions doctrine, noting that decisions of “vast economic and political significance” require clear congressional authorization. The court also found that the fentanyl-related tariffs were not narrowly tailored to address the declared emergency and that the “reciprocal tariffs”—10% on nearly all imports—were far beyond what Congress intended in IEEPA.

The Court of Appeals of the Federal Circuit (CAFC) affirmed the CIT’s ruling on August 29 in a 7–4 decision, with the majority agreeing that the act does not authorize tariffs of the magnitude imposed, citing the statute’s text and legislative history.

The four dissenting judges argued that IEEPA’s broad language, particularly the authority to “regulate importation”, could encompass tariffs during a declared emergency. They emphasized judicial deference to the president in matters of foreign affairs and national security, warning that courts should not second-guess executive judgments in this domain. The dissent also questioned the majority’s reliance on the major questions doctrine, suggesting that Congress intended flexibility in emergencies. This reasoning provides a potential path for the Supreme Court to uphold at least some tariffs, especially if the justices are inclined to defer to broad executive discretion in national emergencies.

In preparation for this week’s arguments, the Justice Department submitted briefs echoing the CAFC dissent, asserting that “regulate importation” includes tariffs, especially when national security is implicated. The president’s team argues courts should yield to executive judgment in emergencies, citing fentanyl trafficking and trade imbalances as “unusual and extraordinary threats”.

Plaintiffs, represented by small businesses and 12 state attorneys general, counter that IEEPA was never intended as a tariff statute. They cite congressional legislative history and specific legal wording. Allowing tariffs under IEEPA would create unchecked executive authority, undermining constitutional checks and balances.

Amicus briefs filed by a variety of parties overwhelmingly argue that the president has exceeded his authority. Advocacy groups caution that broad interpretations of “regulate” could open the door to executive taxation without congressional oversight. Economists warn tariffs could shrink GDP and cost hundreds of thousands of jobs. They also argue that trade deficits are not national emergencies. Historians stress that IEEPA was designed to constrain, not expand, emergency powers after Watergate.

The case before the Supreme Court has four possible outcomes:

1. The president wins completely: All tariffs are upheld, granting the White House sweeping authority under IEEPA, marking a dramatic expansion of executive power.
2. The president wins on fentanyl-related tariffs only: The court allows targeted tariffs tied to narcotics enforcement while striking down broader trade measures.
3. The president loses, but tariff payments must not be refunded to importers: Tariffs are invalidated prospectively, and the court remains silent on duties already paid or orders a lower court to examine the issue.
4. The president loses, and tariff payments must be refunded to importers: The tariffs are invalidated, and the court orders refunds, triggering claims worth billions of dollars.

The court’s ruling will shape US leverage in future trade negotiations. A ruling upholding broad tariff powers would signal that American trade policy can be driven by executive discretion rather than by negotiated frameworks, raising questions about predictability and the durability of commitments.

Conversely, a decision limiting emergency powers could reassure partners that American trade policy remains anchored in law and process. Regardless of the court’s ultimate ruling, however, the United States is likely to continue imposing tariffs to help reshore manufacturing, extract concessions from trading partners, and collect revenue. The president has several other statutes or tools that can be used to maintain a muscular approach to trade policy, including Section 232 tariffs on specific sectors or Section 301 tariffs in response to discriminatory foreign trade practices. Unlike IEEPA, which provides the president with extreme discretion, these other trade tools require investigations and consultations.

The case before the Supreme Court is bigger than tariffs. It is about the balance of power between the executive and legislative branches of the US government. A win for the president would normalize emergency powers as a tool for economic policy, eroding congressional control and authority. A loss would reaffirm constitutional limits and constrain a president’s ability to declare a national emergency. For US allies and adversaries, the outcome will reflect American democracy’s balance of power and the reliability of US commitments in an era of geopolitical uncertainty.