The US Supreme Court is hearing a key case that could decide whether President Donald Trump can keep using a 1977 law to impose sweeping tariffs around the world. The outcome could strip Trump of one of his most powerful tools for pressuring countries on both trade and political issues.
The law under question
The case focuses on Trump’s use of the International Emergency Economic Powers Act (IEEPA) -- a law passed during the Cold War that lets presidents act during a “national emergency” threatening US security or foreign policy. In the past, it has mostly been used to sanction adversaries or freeze assets, not to set trade tariffs.
Trump broke precedent by using it to justify tariffs on countries he said were “taking advantage” of the United States. In 2024, he even declared the country’s $1.2 trillion trade deficit a national emergency, even though America has run deficits for decades.
The lawsuit, filed by small business groups and several states, argues that Trump went too far. Lower courts have already questioned whether the IEEPA law was ever meant to include such tariff powers.
Trump’s argument and backup plans
Trump’s Treasury Secretary, Scott Bessent, said he expects the Supreme Court to uphold the tariffs. But if it doesn’t, he made clear the administration will find other ways.
“If the top court strikes down the tariffs,” Bessent told reporters, “the administration will simply switch to other tariff authorities.”
He pointed to Section 122 of the Trade Act of 1974, which allows 15 per cent tariffs for 150 days to manage trade imbalances, and Section 338 of the Tariff Act of 1930, which permits up to 50 per cent tariffs on countries that discriminate against US goods.
Trump already uses other trade laws, such as Section 232 of the Trade Expansion Act of 1962 for national security-related tariffs on autos, semiconductors and aircraft, and Section 301 of the Trade Act of 1974 for targeting unfair trade practices.
“You should assume that they’re here to stay,” Bessent said about Trump’s tariffs. “Those of you who got a good deal should stick with it.”
Legal and political implications
Critics say Trump’s use of IEEPA violates the Constitution because only Congress can impose taxes or tariffs. Earlier this year, a majority of judges in a lower appeals court agreed that it was “far from plain” that IEEPA authorises such tariffs.
However, Judge James Taranto, appointed by Barack Obama, disagreed, saying Congress deliberately gave presidents “broad authority to choose tools to restrict importation” during national emergencies.
The major questions doctrine may also shape the court’s decision. This principle says the president cannot take actions of “vast economic and political significance” without clear approval from Congress. The Supreme Court has used this doctrine before to block Joe Biden’s student debt cancellation plan.
The stakes for Trump and the economy
Trump has become increasingly reliant on tariffs, using them to pressure China, Mexico and Canada on trade and drug trafficking issues. His team argues the strategy pushed partners like Japan and the EU to make concessions, though others say those gains have been minimal.
Economists warn that if the Supreme Court strikes down IEEPA tariffs, financial markets could face turbulence. The US government may have to refund more than $100 billion in collected duties, potentially cutting into revenue that helped reduce the federal deficit to $1.715 trillion.
“It’s a significant political economy risk that we get addicted to tariff revenue,” said Ernie Tedeschi, a senior fellow at the Yale University Budget Lab. “It makes it harder for any future presidential administration to lower the duties.”
What happens next
The Supreme Court’s conservative majority, which includes three Trump appointees, will hear arguments this week. The timing of the final ruling is unclear, but its impact could reshape how much power presidents have to act unilaterally on trade, and how far Trump can go in his second term.
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