How the US Supreme Court’s tariff ruling could make or break Trump’s economic agenda

How the US Supreme Court’s tariff ruling could make or break Trump’s economic agenda

When US President Donald Trump ordered sweeping tariffs this year, he presented them as a turning point in America's economic destiny. Five months following the president's imposition of the tariffs, the Supreme Court has agreed to hear a case challenging the legality of what has been done. On the line is whether the International Emergency Economic Powers Act (IEEPA), a law not written with tariffs in mind, allows the president to act unilaterally to slap duties on imports. Trump's expansive reading was rejected at lower courts, but his administration is counting on the justices to have a different view, the New York Times reported.

Why tariffs are at the heart of Trump's second term

Tariffs are not just an economic tool for Trump; they are the key to his broader second-term agenda. He has used them to push foreign governments, raise revenue for the federal coffers, and promise to lower the $37 trillion national debt. He has also linked tariffs to foreign policy, suggesting they could stop the Russia-Ukraine war or slow the flow of drugs. The government has called tariffs its most significant foreign policy and economic effort, revealing the significance that this authority carries to Trump's vision.

Courts resist unchecked power

Judges have repeatedly overruled the administration, warning the president has no unlimited ability to unilaterally impose tariffs. Attorneys point out Congress has repeatedly delegated tariff powers in clear and limited terms, but IEEPA does not mention tariffs even once. Nevertheless, attorneys for Trump assert the presidents require broad discretion in declaring national emergencies and courts can play only a limited role in restraining such actions.

The stakes for businesses and the economy

For businesses, particularly small importers, the tariffs have been costly and unpredictable. Some companies have testified that rate fluctuations and unexpected changes in supply chains have turned their businesses on their heads. The administration retorts that tariffs protect American manufacturing and give leverage in trade negotiations. Trump threatened an economic crisis if his powers are curtailed, even going to the extent of suggesting outcomes as dire as a Great Depression. Critics of his say that Americans pay for it in the form of added costs.

Other tariff powers still exist

Trump also has other avenues even if the Supreme Court limits the use of IEEPA. Section 301 authorizes tariffs on unfair trade and Section 232 authorizes duties on grounds of national security. These powers, already used broadly against China and for critical imports such as steel and semiconductors, are more specific and open to formal investigation. Estimating that between on-the-books and under-consideration tariffs, duties might end up covering a third of U.S. imports, but with less room for manoeuvre than IEEPA provides.

A decision that might recast trade policy

The ruling will determine if Trump can continue to use tariffs as a nearly limitless weapon of trade and foreign policy. A favorable ruling will solidify his authority to bypass Congress and expand his influence over global commerce. An unfavourable one will force the administration to resort to narrower, slower-moving authorities, resetting not just his economic agenda but America's approach to trade and diplomacy. For Trump, the choice could decide whether tariffs are his default action or become an occasional one among a broader array of tools.