All eyes turn to Supreme Court as challenge tests presidential power

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(The Center Square) – The U.S. Supreme Court is set to hear arguments Wednesday morning in a high-profile case over tariffs that could test the limits of presidential power in the U.S.

The Supreme Court agreed to take the case in September on an expedited schedule, but a ruling could still take time. Oral arguments begin at 10 a.m. eastern Wednesday. The Supreme Court will live-stream the audio of the hearing on its website.

A group of Democrat-led states, five small businesses and two Illinois-based toymakers have challenged President Donald Trump's authority to impose tariffs without Congressional approval under a 1977 law. That law, the International Emergency Economic Powers Act, doesn't mention the word "tariff" and has never been used to impose tariffs. They argue that only Congress has the power of the purse and that Trump can't impose tariffs without approval from Congress. 

However, Trump's legal team argues that the law is a clear delegation of emergency power, granting the president broad authority to act in times of crisis. Trump has declared persistent trade deficits and fentanyl smuggling to be emergencies. The U.S. has posted trade deficits every year since 1975. Trump said the situation became an emergency shortly before he took office for his second term.

Trump has used tariffs to try to reorder global trade to give U.S. businesses a home-field advantage. Trump put import duties on every U.S. trading partner, but American companies say they are the ones paying the new taxes. In some cases, companies pass the added costs to consumers, who were already frustrated by high prices before Trump took office in January.

Since April 2, Trump has brokered several framework trade deals with multiple trading partners, including the United Kingdom, the European Union, Japan and South Korea. The president said those deals will bring in trillions in new investments in U.S. manufacturing.

Businesses say Trump's tariffs, which have been paused, suspended and changed about 40 times since April 2, make it impossible to plan ahead. They also say the tariffs have increased their costs. 

Crutchfield, a Virginia-based electronics retailer, told the high court it can't plan ahead because it doesn't know how much the products its sells will cost.

"It is important to recognize that both high tariffs and the frequent changes in the tariffs have real-world, devastating consequences on retailers like Crutchfield that have no alternative today to importing the electronics and other products they sell," an attorney for the company wrote. 

The panel of nine Supreme Court justices allowed for expanded oral arguments in the case, granting the government 40 minutes to make its case, 20 minutes for the states that challenged the tariffs and 20 minutes for the small businesses.

Trump has predicted dire consequences if the Supreme Court strips his authority to impose tariffs. In August, Solicitor General D. John Sauer and Assistant Attorney General Brett Shumate warned the U.S. Court of Appeals for the Federal Circuit that tariffs must stay in place to prevent a financial disaster.

"Suddenly revoking the President's tariff authority under IEEPA would have catastrophic consequences for our national security, foreign policy, and economy," they wrote in a letter. "The President believes that our country would not be able to pay back the trillions of dollars that other countries have already committed to pay, which could lead to financial ruin."

More recently, Treasury Secretary Scott Bessent stated that losing tariff authority could undermine Trump's trade deals worldwide.

In August, the U.S. Court of Appeals for the Federal Circuit affirmed a previous lower court ruling, but said Trump's tariffs could remain in place while the administration appeals to the U.S. Supreme Court. In the 7-4 decision, the majority of the Federal Circuit said that tariff authority rests with Congress.

Treasury Secretary Scott Bessent said the appeals court ruling had already hindered the administration's efforts.

"The recent decision by the Federal Circuit is already adversely affecting ongoing negotiations," Bessent wrote in a declaration in September. "World leaders are questioning the president's authority to impose tariffs, walking away from or delaying negotiations, and/or imposing a different calculus on their negotiating positions. The court's ruling has taken away substantial negotiating leverage for the president to achieve the best trade deals for the American people."

Bessent said that if the court forced the president to unwind the deals, it would disrupt financial markets. He urged a quick ruling.

"The longer a final ruling is delayed, the greater the risk of economic disruption," he said. "For example, delaying a ruling until June 2026 could result in a scenario in which $750 billion-$1 trillion in tariffs have already been collected, and unwinding them could cause significant disruption."

Bessent added: "If these agreed upon frameworks were unwound and the investments and purchases had to be repaid, the economic consequences would be catastrophic."

Tariffs are already becoming a go-to source of revenue for the administration. A report from U.S. Customs and Border Protection shows the U.S. has collected nearly $90 billion in tariffs through September. Trump has said he wants to use the revenue to reduce the income tax burden on American families and pay down the federal debt, which recently topped $38 trillion.

An August report,from the Congressional Budget Office,estimated tariffs could bring in $4 trillion over the next decade. That CBO report came with caveats and noted that tariffs will raise consumer prices and reduce the purchasing power of U.S. families.

A tariff is a tax on imported goods that is paid by the person or company importing the goods. The importer can absorb the cost of the tariffs or try to pass the cost on to consumers through higher prices.