Will Trump’s Tariffs Survive the Supreme Court?

0:05We will hear argument this morning in case 241287, Learning Resources v. This is Trump and the consolidated case. General Sauer? Yesterday, the Supreme Court heard arguments in one of the year's most anticipated cases. The case is about whether Donald Trump exceeded his authority, violated the law when he enacted his sweeping global tariffs at the beginning of his second term. That's our colleague James Ramoser, who covers the Supreme Court. It's hard to overstate its importance. It's certainly one of the biggest cases the Supreme Court will hear this term, if not the biggest case. Hanging in the balance is billions of dollars in tariffs and one of President Trump's central economic policies.

0:53But James says the case is about even more than that. So as if the case isn't big enough just by virtue of testing Donald Trump's signature economic policy, the case even has broader implications than that because it will affect the balance of power between the president and Congress, not just the current president, but presidents in the future. And if you could use just one word to characterize the sentiment that the justices displayed yesterday in their questions, what would it be? If I had to put it in one word, the word I would use is skeptical.

1:34Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Thursday, November 6th.

1:47Coming up on the show, will Trump's tariffs survive the Supreme Court's scrutiny?

2:05My fellow Americans, this is Liberation Day. Waiting for a long time. In April, President Trump announced sweeping tariffs. April 2nd, 2025, will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. And how did the Trump administration justify this move at the time? The Trump administration cited a 1977 law known as the International Emergency Economic Powers Act. Otherwise known as AIPA, which is very fun to say. AIPA, yes. Yes, it sounds more like an exclamation rather than a statutory term, but that is how it's known.

2:59Or something my son might say when he's trying to, you know, make an animal sound. Right. I'm not sure what animal that is. Yeah, me either. Anyway, sorry. So what is this International Emergency Powers Act? So what this 1977 law says is when the president determines that there is a national emergency originating from abroad, the president has the power to take certain steps. in regard to foreign imports. And the key language in the statute is that the law gives the president the power to regulate the importation of goods. And that phrase has long been used by previous presidents to do things like impose embargoes.

3:49The statute also gives the president a bunch of other regulatory-type powers with regards to foreign imports. There's a key list in the statute of a bunch of different verbs that the president has the power to do. Those verbs include investigate, block, regulate, direct and compel, nullify, void. One of those verbs is not tax. One of those verbs is not tariff. And that's where the problem arises, because AIPA does not use the T word anywhere in its text. In order to invoke AIPA, Trump declared two emergencies. The first, he said, was a trade deficit emergency, meaning that America buys more things from abroad than it sells.

4:44The second was the fentanyl crisis. And so in response to trade deficits, he enacted tariffs on virtually every country in the world. And in response to the fentanyl crisis, he enacted punitive tariffs, additional punitive tariffs, on three countries, China, Mexico, and Canada. Today, there's a baseline 10 % tariff on virtually all countries and steeper tariffs on others. Some tariffs are under negotiation. Through August, the government has collected around$90 billion from the tariffs, according to analysts who reviewed Customs and Border Protection data. Not long after the tariffs were put in place, several small businesses and a dozen states sued the Trump administration.

5:30Their argument was quite simple. Their argument was that Trump does not have legal authority to enact these tariffs. The only law, the only statutory authority that he cited was the law that we talked about, AIPA. AIPA doesn't use the word tariffs. According to the challengers, the vague phrase in the statute, regulate imports means regulate. It doesn't mean tax. The Constitution gives the taxing power and therefore the tariff power directly to Congress. The president doesn't have any inherent authority to enact these tariffs. And so if he wants to do it, he has to point to some statute where Congress delegated the tariff authority.

6:14And presumably these companies are also saying this is creating a hardship for us. We're having to pay this much harder, bigger tax. Our costs are going up significantly, and we don't want that. Yes, they contend that they are suffering quite significant financial harms by virtue of having to pay these steep tariffs. And three lower courts have ruled in their favor and against the Trump administration. The reasoning of the three lower courts differed in some of the details, but the bottom line is that three lower courts all ruled against Trump and that's how the cases got to the Supreme Court on appeal.

6:51Mr. Chief Justice, and may it please the court, on April 2nd, President Trump determined that our exploding trade deficits have brought us to the brink of an economic and national security catastrophe. Yesterday, at the Supreme Court, Solicitor General John Sauer was the first to stand before the judges, arguing on behalf of the Trump administration. His argument was pretty simple. The word regulate in that 1977 law, AIPA, gives the president the power to impose sweeping tariffs. The phrase regulate importation plainly embraces tariffs, which are among the most traditional and direct methods of regulating importation.

7:27And then, you know, as part of the argument, one thing that he says is that everyone agrees that AIPA gives the president the power to enact embargoes, to block trade altogether. And it would be a little funny if Congress said to the president, you have the power to block trade wholesale, to stop all foreign trade, but you don't have the power to simply enact a small tariff on those very same goods that you could block altogether. This is what was referred to in the oral argument as the donut hole problem. Sauer says under the challenger's interpretation of the statute, where the president has the ability to embargo but not to tariff, that leaves a big, giant, illogical donut hole in the law.

8:18And so the Supreme Court shouldn't read it that way, the Solicitor General argues. Was there any discussion about whether or not these emergencies that the president cited were legitimate or not? There was some minimal discussion of that. So I think as a baseline, the Supreme Court in general is usually not in the business of second-guessing presidential determinations about emergencies, right? The Supreme Court would typically say, we're not the experts on these sorts of things. If the president thinks there's an emergency about fentanyl, if the president thinks there's an emergency about trade deficits, you know, we're not going to really scrutinize that.

8:58Not all justices gave the administration such leeway, though. For instance, liberal justice Elena Kagan seemed to suggest that the Trump administration has been invoking emergencies all over the place. And in fact, you know, we've had cases recently which deals with the president's emergency powers. And it turns out we're in emergencies everything all the time, about like half the world. And she didn't elaborate, but I interpreted that as her basically saying like, you know, at some point it becomes implausible if there are just, you know, emergencies about the drug trade, emergencies about immigration, emergencies about trade deficit.

9:30and lots of other emergencies that Trump is attempting to invoke. One of the main areas of questioning was over a concept called the major questions doctrine. So the so-called major questions doctrine is this legal theory that says, essentially, if a president wants to rely on language in a statute to enact a policy of sweeping, vast, political, or economic significance, the president needs to point to exceedingly clear statutory authority. He can't just take some vague phrase in a statute as the legal basis. Congress needs to be very, very clear if it's going to delegate to the president the power to enact a really big policy, essentially.

10:21So if he's going to do something major that has a huge impact on the country or the economy, it's got to be pretty clear that Congress intended for him to have that power. You can't just find some little line in some obscure law and say, yeah, this gives me the power to change everything, basically. That's exactly what the major questions doctrine says. The most famous recent use of the major questions doctrine was when the Supreme Court struck down Biden's student loan forgiveness program, which he had justified by citing an old law and the COVID emergency. Yesterday, Liberal Justice Sonia Sotomayor question whether Aiba really does delegate the power to tariff to the president if the law doesn't use the word.

11:02Could you tell me why it is that when Congress intended to permit a president to regulate by imposing tariffs, it's always used tariff and regulate. I have about 16 laws in the past that when Congress intended regulate to mean taxing, that it used taxes simultaneously. But it didn't here. Okay, let's talk about the conservative justices now and how they responded. Let's start with Amy Coney Barrett. Yeah, Barrett is definitely going to be a critical vote in this case. Of course, she's one of three Trump appointees on the court, so a lot of people were watching her very closely. And she styles herself, like many of the conservatives, as a real, true, strict textualist.

11:53And so she, too, was very focused on why the statute doesn't use the word tariff and how important that is. Sauer, can I just ask you a question? 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? And she sort of hammered him on that. I think our argument goes a bit further than that as an interpretive matter, because if you look at that history, the history of delegations. Could you just answer the justice's question? Can you identify any statute that used that phrase to confer tariffs?

12:28At one point where she asked Sauer, look, I understand if Trump thinks there's an emergency regarding trade deficits, but these tariffs are so sweeping. They're imposed on virtually every country in the world. And she asked, is that really proportional? Is that necessary? These are imposed on, I mean, these are kind of across the board. And so is it your contention that every country needed to be tariffed because of threats to the defense and industrial base? I mean, Spain, France, I mean, I could see it with some countries. But explain to me why as many countries needed to be subject to the reciprocal tariff policy as are.

13:15So early on, it looked like things weren't really looking great for Trump. No, I don't think things were looking great. I mean, Barrett asked some skeptical questions of the Solicitor General. Even Chief Justice John Roberts and Brett Kavanaugh asked a few skeptical questions. And then I think the most dramatic moment in the argument came about 45 minutes in when we heard for the first time from Justice Neil Gorsuch. That's next.

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14:23Justice Neil Gorsuch was President Trump's first nominee to the Supreme Court back in 2017. He's considered to be one of the court's most conservative members. He's not often kind of considered a swing vote. And for the first 45 minutes, we didn't hear him say a word. and that all of a sudden he jumped in. And for 10 minutes straight, he just hammered John Sauer in like a pretty aggressive way. I thought that was just such a key moment because Gorsuch was really invested in this idea of the separation of powers and what this case says about the balance of power between Congress and the president.

15:03So could Congress delegate to the president the power to regulate commerce with foreign nations? as he sees fit? To lay and collect duties as he sees fit? We don't assert that here. That would be a much harder case now in 1790. Isn't that the logic of your view, though? I don't think so, because we're dealing with a statute that was a carefully crafted compromise. It does have all the limitations that I just talked about. You're saying we shouldn't look, we shouldn't be concerned with, I want to explain to me how you draw the line. And Gorsuch was very concerned about the fact that the taxing power belongs to Congress, not the president.

15:39And he seemed to be suggesting even if IEPA does give the president the power to enact tariffs, that delegation in itself might be unconstitutional. In other words, even if Congress did mean to give the president the power, it might be unconstitutional for Congress to do that. The reason, Gorsuch suggested, is that Congress should not be able to hand away its core powers like the taxing power. And Gorsuch even used examples. He asked Sauer, could Congress simply delegate to the president the power to declare war? Could Congress simply hand that away? What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce, for that matter, declare war, to the president?

16:29We don't contend that he could do that. Why not? Well, because we're dealing with a statute, again, that has a whole set of limitations. I'm not asking about the statute. General, I'm not asking about the statute. I'm asking for your theory of the Constitution and why the major questions of non-delegation, what bite it would have in that case. And Gorsuch seemed to be saying, no, of course not. We would never allow that. And similarly, he seemed to suggest we shouldn't allow Congress to delegate away core taxing powers either. Gorsuch also worried that if Congress were able to delegate its powers to the president, it wouldn't be able to claw it back.

17:03So Congress, as a practical matter, can't get this power back once it's handed it over to the president. It's a one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people's elected representatives. So this exchange went on for quite a while, and it really became clear that Gorsuch's vote not only was in play, but it seemed that Gorsuch was leaning very heavily against the Trump administration. And if Trump can't get Gorsuch's vote, it's very hard to see how Trump gets to five votes to uphold the tariffs here. Did any of the justices seem receptive to Sauer's arguments?

17:46I think that the most receptive justice was Sam Alito, certainly one of the most conservative members of the court. And he asked a series of quite skeptical questions to the challengers when it came time for their lawyers to stand up at the lectern. He was very concerned about making sure that presidents retain the ability to deal with unforeseen emergencies. He was focused on the fact that this 1977 law is an emergency statute. It's meant for the president to deal with emergencies. Congress can't always foresee exactly what those emergencies will be. And so the court should therefore interpret the statute broadly to give the president a lot of latitude.

18:38James says that the court's other three conservative justices, Roberts, Thomas, and Kavanaugh, were a little harder to read and ask tough questions of both sides. Yesterday, Trump told Fox News he heard the court case went well and the quote, it would be devastating to our country if we lost that. I know it's impossible to say how the judges are going to rule, but you can obviously get a sense of where they're leaning based on their questions. So how is it looking for Trump's tariffs at the Supreme Court? Yeah, I think for all the reasons we've talked about, it was not a great day for Trump at the Supreme Court.

19:14You know, I don't think it's a shoo-in that the court is going to strike down these tariffs wholesale. But it is difficult for me to count to five justices who signaled that they were willing to uphold the tariffs based on their comments at the oral argument. If a majority of the court does rule against Trump, then the next question becomes how broad or narrow would that ruling be? But I think some justices may be hesitant about issuing a ruling that wipes away such a centerpiece of the president's policy agenda. Right, because it's hard to imagine if the Trump administration gets these tariffs struck down by the court, that Trump is just going to give up on this.

20:08I mean, as you said earlier, he has been talking for years about how tariffs are the most beautiful word in the English dictionary. That's exactly right. And he's only amplified his rhetoric in recent days. He has said that these tariffs are a literal matter of life and death for the country. So yes, it is impossible to imagine that if the court rules against him, Trump is just going to concede defeat and say no more tariffs. If the court rules against Trump's tariffs, it's possible everyone who paid a tariff could get a refund, though that could be a quite complicated process. It's also possible the court might just say these tariffs are illegal going forward.

20:50If Trump wins this case and the Supreme Court rules in his favor, what would be the implications of that and what would it mean for presidential power? Certainly presidents would have a newfound tariff authority that prior presidents didn't think they had. No president before Trump has ever tried to use AIPA to impose tariffs. And if the Supreme Court says that AIPA actually does, contrary to what people thought, give the president tariffing authority, then other presidents could use that. And so one hypothetical that actually came up in the oral argument is this idea that some future Democratic president could declare a climate change emergency and then use AIPA to impose tariffs on foreign oil, for example.

21:43Right. And so like that, these are the kinds of scenarios that I think will be on the court's mind as it grapples with this case. It's unclear when exactly the court will rule on this case. James said that a case this big is often held until the end of the session in the summer. That being said, both sides asked the court to take up the case quickly and would like the court to decide quickly. So I think it's very feasible that a ruling could come much, much sooner than next summer, perhaps early 2026 or even by the end of the year in a matter of weeks or a month or two. And I think the Supreme Court is aware that the ruling on this question is being highly anticipated by the markets and economic actors.

22:40And so I think if they know that they're going to issue a clear ruling, either upholding or striking down the tariffs, there might be a premium to get out the decision somewhat quickly.

23:10We're out every weekday afternoon. Thanks for listening. See you tomorrow.