USA Supreme Court to Review Tariffs on Fast-Track Schedule

The US Supreme Court said it will decide whether the bulk of President Donald Trump’s tariffs are legal, agreeing to quickly review his signature economic policy in a case with worldwide financial and political implications.

Heeding calls from both sides, the justices said in an order on Tuesday that they will hear arguments in the first week of November, an unusually aggressive schedule that suggests the court will try to resolve the case quickly. The tariffs remain in place for now, even though a federal appeals court ruled that Trump exceeded his authority by imposing them.

At stake are import taxes affecting trillions of dollars in international commerce. A Trump victory would bolster presidential power and potentially give him a potent new tool to wield against trading partners as he tries to impose his global agenda.

A decision striking down the levies would cut the current average US effective tariff rate of 16.3% by at least half and could force the US to refund tens of billions of dollars, according to Bloomberg Economics analyst Chris Kennedy. It could also upend the preliminary trade deals Trump has struck with some countries.

The challenged taxes include Trump’s April 2 “Liberation Day” tariffs, which impose levies of 10-50% on most US imports depending on the country they come from. The April 2 tariffs represented the biggest increase in US import taxes since the 1930 Smoot-Hawley levies, with the country’s average applied tariff rate at its highest level in more than a century.  

The appeal also covers tariffs Trump imposed on Canada, Mexico and China in the name of addressing fentanyl trafficking. The case stems from separate lawsuits filed by Democratic-led states and a group of small businesses led by wine and liquor distributor V.O.S. Selections Inc. 

Explainer: Here Are Trump’s Options If Ruling Against Tariffs Is Upheld

The case will be the first time the Supreme Court has directly reviewed a Trump policy during his second term in office. Although the court has issued more than 20 Trump-related orders on an emergency basis – siding with him in the large majority of cases – each of those was a temporary decision designed to govern only until courts could issue a definitive ruling on a disputed policy.

Trump says his tariffs are authorized under the 1977 International Emergency Economic Powers Act, a law that gives the president a panoply of tools to address national security, foreign policy and economic emergencies. The measure, known as IEEPA, doesn’t mention tariffs as one of those powers, though a key provision says the president can “regulate” the “importation” of property to address an emergency.

Solicitor General D. John Sauer, the administration’s top courtroom lawyer, told the justices that “the power to ‘regulate importation’ encompasses the power to impose tariffs or duties on imports.”

The US Court of Appeals for the Federal Circuit ruled 7-4 that the law doesn’t authorize such a sweeping array of tariffs.

“The statute bestows significant authority on the president to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,” the appeals court said. The ruling upheld a decision from the Court of International Trade.

The Federal Circuit majority noted that the Constitution gives Congress the power to establish tariffs, not the president. The Supreme Court in other contexts has required Congress to be explicit when it hands off its authority over an issue of major economic or political significance.

The challengers also contend that the US trade deficit Trump cites to justify his global tariffs isn’t the type of emergency required to invoke IEEPA. The law requires an “unusual and extraordinary threat” for the president’s emergency powers to kick in. 

QuickTake: Who Loses the Most on Trump’s Tariffs? Who Wins?

Trump has cast tariffs as critical to leveling the playing field for American businesses and workers. He has also used the threat of levies to pressure Canada and Mexico to crack down on illegal immigration, Brazil to drop the prosecution of former President Jair Bolsonaro, and India to stop buying Russian oil.

At the same time, administration officials have downplayed the impact of the litigation by saying that most of the tariffs can be imposed by other legal avenues. Trump’s tariffs on steel, aluminum and automobiles were imposed under a different law, so are not directly affected by the appeal.

Opponents say the tariffs are driving up costs for consumers, providing little by way of concessions and needlessly increasing tensions with other countries.

The Supreme Court will also consider a second tariff challenge pressed by two educational-toy makers. Those companies are pressing similar arguments but filed their suit in federal district court in Washington, rather than in the Court of International Trade.

The combination of the two cases means the Supreme Court will be able to rule on the legality of the tariffs no matter which lower court was the proper venue for the challenge. Opening briefs from the Trump administration are due by Sept. 19. The companies have until Oct. 20 to respond.

The cases are Trump v. V.O.S. Selections, 25-250, and Learning Resources v. Trump, 24-1287.

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