The latest round of a challenge to President Donald Trump’s authority to impose tariffs using emergency powers began yesterday before the U.S. Supreme Court. Thus far, the plaintiffs, a group of small businesses and 12 states, have prevailed in lower courts.

At issue is the scope of the International Emergency Economic Powers Act, a statute from the 1970s. Using IEEPA and executive orders, Trump began imposing two sets of tariffs in February:

  • “Fentanyl” tariffs aimed at China, Canada and Mexico to encourage those countries to increase efforts to stop the flow of fentanyl and its precursor chemicals.
  • Global “reciprocal” tariffs on imports from almost all countries to address trade deficits that Trump declared a national emergency.

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A variety of news outlets and analysts described the court as “skeptical” of the government’s argument, citing pointed questions asked by the justices.

  • U.S. Solicitor General D. John Sauer, arguing on behalf of the Trump administration, argued that IEEPA allows the president to regulate imports, which should include the use of tariffs.
  • Justice Amy Coney Barrett, who was nominated to the high court by Trump at the end of his first term, asked: “Can you point to any other place in the code – or any other time in history – where that phrase, together, ‘regulate importation’ has been used to confer tariff imposing authority?”
     

Several justices made comments suggesting that allowing the president’s IEEPA tariffs to stand might run afoul of the separation of powers spelled out in the Constitution. Chief Justice John Roberts noted that tariffs are a form of taxation, which is the responsibility of Congress, adding, “to have the president’s foreign affairs power trump that basic power for Congress seems to me to kind of neutralize between the two powers, the executive power and the legislative power.”

The president requested a speedy review of the case in September, and a verdict is expected quickly, although the justices have until the end of the court’s term in July to issue a ruling.

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While many American businesses would welcome relief from the tariffs, a reversal by the nation’s highest court would add a new layer of uncertainty.

  • The government would likely be required to refund the estimated $100 billion in duties collected so far.
  • A ruling against the tariffs could unravel trade deals negotiated since the tariffs were announced.

Also, as Politico reports, White House aides “have spent weeks strategizing how to reconstitute the president’s global tariff regime if the court rules that he exceeded his authority.”

  • It’s important to note that whichever way the high court rules, it will not affect the specific tariffs on steel and aluminum, which affect promo categories from drinkware to signage.

Former Commerce Secretary Wilbur Ross, who served during Trump’s first term, predicted “a split decision” from the nine justices. “I would be extremely surprised if the Court would rely on such nit-picking to create chaos in international trade and the securities markets,” he told CNN.

Tariffs and trade topped the list of concerns PPAI members brought to Congress during PPAI’s annual Legislative Education and Action Day in April. The Association will continue monitoring the issue and communicating to lawmakers the negative impacts of tariffs and economic uncertainty on promo businesses of all sizes.