Tariffs are going to the Supreme Court. What's at stake?

0:00President Trump's tariff policy and his use of executive authority faces its most consequential test yet as it goes before the Supreme Court on Wednesday. I think it's the most important subject discussed by the Supreme Court in 100 years. That was Trump this past weekend on CBS's 60 Minutes. The president has been clear in his defense of his signature economic tool, tariffs. And he has warned again and again that there will be dire economic consequences if this tool, raising taxes on imports to extract concessions from other countries, is taken away from him. I think our country will be immeasurably hurt.

0:37I think our economy will go to hell. Look, because of tariffs, we have the highest stock market we've ever had. But at the same time, many business leaders have said that tariffs are shutting down economic opportunity. Kentucky farmer Caleb Ragland farms 4 ,000 acres of soybeans, corn, and winter wheat. And he's also the president of the American Soybean Association. The message that I have for President Trump and the administration is we need opportunities from the market and tariffs and trade wars, they take away opportunity. Whether tariffs are helping or hurting the economy is not the direct question before the court.

1:17Instead, it is whether Trump exceeded his authority to place tariffs on foreign goods without congressional approval. Democratic Senator Amy Klobuchar from Minnesota spoke last week on the Senate floor, calling for bipartisan legislation to overturn Trump's emergency tariffs. Finally, enough is enough. We're asserting our power, and you're not going to be able to just put on a 40 percent tariff on Brazil with a country with which we have a trade surplus, simply because of the guys facing a trial there that the president doesn't like. no, this is not how this works. It's not how it works under the Constitution.

1:54It's not how it works under the law. Consider this. The White House will defend the constitutionality of the president's tariff emergency, the centerpiece of his economic policy. How is the policy shaping the economy? And what could the decision mean for businesses, for consumers, and for the president's string of possible trade deals?

2:24From NPR, I'm Scott Detrow.

2:34It's Consider This from NPR. On Wednesday, the Supreme Court will hear arguments in a major case about the administration's use of tariffs. President Trump has long touted the power of tariffs as a tool for trade negotiations and even for ending conflicts. But now the justices will hear how that tool may be misused. Here to discuss the administration's tariff policy and its economic impact are White House correspondent Danielle Kurtzleben and chief economics correspondent Scott Horsley. Danielle, let's start with you. What are the Supreme Court justices considering on Wednesday? Well, this case is a big deal.

3:08The court is going to be ruling on the legality of some tariffs that are very central to Trump's economic agenda. Furthermore, this is yet another case where the Supreme Court is deciding how much power Trump can have. So the case matters very much. Now, in addition, to hear the White House tell it, the economic stakes of this case are apocalyptic. Trump has been saying that for months. Here he was in October. That's one of the most important cases in the history of our country. because if we don't win that case, we will be a weakened, troubled financial mess for many, many years to come. I don't even know if survivable is a good term.

3:48I mean, Scott, you are our in-house expert on tariffs. Is the president right? Let's be clear. The United States will survive with or without these tariffs. Now, the president's import taxes are raising a lot of revenue for the federal government, about$30 billion in September alone. But that is less than 6 % of all the money the federal government took in that month. And in fact, the rise in tariff revenue in September was more than offset by a drop in corporate tax collections. Keep in mind, too, that tariff revenue doesn't just drop out of the sky. And despite what the president likes to say, most of the money does not come from foreign countries or foreign companies.

4:27It's paid by people and businesses here in the United States, people like Patrick Allen, who is a wine importer in Columbus, Ohio. That revenue comes from somewhere. It's a tax, and it gets built into the price everybody's paying for goods. We're the people that are paying this tax, and eventually it gets passed on. It has to be passed on to the consumer. There's no one that can eat this. But whether you think tariffs are good for the economy or bad for the economy, that's not what the Supreme Court has to decide. The court has to decide, are these tariffs constitutional? All right. So, Danielle, what is the central argument here?

5:03What is the central legal argument? The big question in this case is how much power a president has to impose tariffs. The justices will be considering one specific type of tariffs that Trump has imposed on individual countries. So this will include the tariffs Trump called reciprocal earlier this year, even though they really didn't look all that reciprocal in the end. and also other tariffs he said would combat the inflow of fentanyl into the U.S. Now, importantly here, the Constitution explicitly gives Congress the power to tariff. But it is also true that Congress over the years has passed laws that give some of that tariffing power to the president.

5:40So an issue in this case is a 1970s law that gives the president broad economic powers in the case of national emergencies. So the question is whether Trump overstepped what that law intended. Now, the businesses and states who brought this case say Trump took it too far. They say, look, this law doesn't even use the word tariff. And Congress also didn't explicitly give Trump, they argue, the power to impose sweeping taxes on goods from almost the entire world. So, Scott, it's not the question the court is considering, but it's an important political question. How are these tariffs affecting the economy?

6:13Well, they've raised prices for everything we import, whether it's coffee or bananas or raw materials or parts that factories use to assemble into finished products here in the U.S. In some cases, foreign suppliers have absorbed some of that added cost, but a lot of it's being paid by Americans. And that's a key reason inflation has been inching up in recent months. Annual inflation in September was 3%, up from just over 2 % back in April when the worldwide tariffs were rolled out. Inflation is still far lower than it was a few years ago, but it's moving in the wrong direction since these worldwide tariffs took effect.

6:47Now, part of the president's stated goal in making imports more expensive is to promote domestic manufacturing. But so far, at least, the tariffs don't seem to be having that effect. Factories have lost more than 40 ,000 jobs since April. And surveys by the Institute for Supply Management show factory activity has been slumping, not growing. Every month, those surveys are filled with complaints from factory managers who say the wild and unpredictable swings in tariffs are making their jobs harder, not easier. And we should add here that for the White House, wild and unpredictable is a feature, not a bug.

7:23I mean, in this case, Trump has claimed a really large authority to impose or revoke tariffs really according to his whims. And he's been using those tariffs as leverage in doing something he loves, which is deal making. He likes going to foreign countries and using the threat of high tariffs as a way to try to extract concessions to get them to pledge big investments in the U.S. or purchases of U.S. goods or once again, pledges of those purchases. But those trade deals he's striking, they're not trade deals as we often think of them. What you have thus far is a lot of non-legally binding frameworks or memos.

8:00And in many cases, we don't know the details of these deals or the details are just still being worked out behind the scenes. OK, let's look down the line a few months or however long it takes the court to decide. Let's say the Supreme Court does get rid of these tariffs. What happens next? Well, only some of Trump's tariffs are being challenged in this case. So if they're struck down, the average tax on imports would drop from about 18 percent down to about 9 percent. But there are other laws that give the president more clear-cut authority to impose tariffs. And Georgetown professor Kathleen Clausen says even if Trump loses this case, he could probably reassemble much of his tariff wall.

8:35I think in the end, he could probably piece together something very close to, if not identical, frankly, to what he's done so far. That's not to say so then we might not have legal challenges in the courts once again. But certainly on the surface, I think the president could move to replicate what he's already done using these other statutes. But those other laws she's talking about do come with strings attached, for example, time limits. So that could at least make any new tariffs a little more predictable. But one more thing here. It is also possible if the court determines these tariffs illegal, that businesses could be able to get refunds on the tariffs they've already paid.

9:14So if that happens, and again, that's if, this could get very chaotic. That is NPR's Danielle Kurtzleben and Scott Horsley. Thanks to you both. You're welcome. Thank you. This episode was produced by Connor Donovan and Karen Zamora. It was edited by Courtney Dorning, Raphael Naum, and Dana Farrington. Our executive producer is Sammy Yenigan.

9:38It's Consider This from NPR. I'm Scott Detrow.