Key Takeaways
- The Supreme Court heard oral arguments on Wednesday in a lawsuit seeking to overturn many of President Donald Trump’s tariffs.
- The justices expressed skepticism about the administration’s legal justification for imposing the tariffs, but the outcome was far from certain.
- A ruling against the tariffs would force the administration to impose import taxes by other means, which have significant limitations.
The fate of President Donald Trump’s trade war is now up to the nine justices of the Supreme Court.
The Supreme Court heard oral arguments Wednesday in a case challenging President Donald Trump’s authority to impose double-digit tariffs on U.S. trading partners without permission from Congress.
The case concerns the International Emergency Executive Powers Act of 1977, which Trump invoked when imposing his wide-ranging “reciprocal” tariffs against most countries in the world, declaring a national emergency in the process. The IEEPA tariffs account for about half the tariff revenue collected in 2025 so far, according to economists at Deutsche Bank.
Both liberal and conservative justices probed the administration’s arguments for imposing the tariffs, and also poked a few holes in the counter-arguments. But both sides agreed on one thing: that the stakes of the case are high.
“Tomorrow’s United States Supreme Court case is, literally, LIFE OR DEATH for our Country,” Trump posted on social media Tuesday. “With a Victory, we have tremendous, but fair, Financial and National Security. Without it, we are virtually defenseless against other Countries who have, for years, taken advantage of us.”
What This Means For The Economy
The Supreme Court could, in a matter of months, upend President Donald Trump’s most significant economic policy and deal a blow to his efforts to reshape U.S. trade with the rest of the world.
Lower courts ruled to strike down the tariffs, although the Supreme Court allowed them to stay in place while the case is decided.
Attorney Neal Katyal, arguing on behalf of companies who sued to overturn the import taxes, said the law does not allow Trump to impose tariffs, which are effectively a tax on the American people.
“It’s simply implausible that in enacting IEEPA, Congress handed the president the power to overhaul the entire tariff system and the American economy in the process, allowing him to set and reset tariffs on any and every product from any and every country in any and all times,” he said.
Some of the justices voiced concerns that allowing the tariffs to stand would give too much power to the president, and wondered if a future liberal president could use similar “emergency” powers to declare a “climate emergency” and impose tariffs on cars or other products that emit greenhouse gasses, for example.
“As a practical matter, you can’t get this power back once it’s handed over to the President,” Justice Neil Gorsuch said. “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.”
Which Way Are They Leaning?
To some experts, the questioning indicated the justices were leaning toward overturning at least some of Trump’s tariffs. The administration could still impose tariffs through other legal channels, but those come with more limitations, for instance, requiring an investigation into other countries’ unfair trading practices.
“After that argument, if I were the Trump Administration, I’d be burning the midnight oil over the next couple of weeks drawing up tariff backup plans,” Peter Harrell, a visiting scholar at Georgetown Law School, posted on social media.
Prediction-market gamblers on Polymarket were pricing in a 27% chance Trump’s tariffs would survive, leaving a considerable amount of uncertainty about the outcome of the case. A ruling could come as soon as December, analysts at Bank of America said in a research note.
“Certainly, it seems possible that the Supreme Court will issue an opinion holding that the IEEPA tariffs exceeded President Trump’s authority, consistent with those of the lower courts,” trade expert Dave Townsend, a partner in law firm Dorsey & Whitney’s international trade group, wrote in a commentary. “It is, however, far from clear what direction the Supreme Court is headed in its ultimate opinion.”
The case has significant implications for the trade wars that have rattled the economy by fueling uncertainty and hurting household budgets, as importers have passed the costs along to customers. The tariffs are estimated to cost the average family $1,800 in 2025, according to the Yale Budget Lab.
Overturning Tariffs Could Boost Economy
If the Supreme Court went so far as to order refunds of the tariffs already collected, it could give significant relief to businesses and households who have either directly or indirectly paid the import taxes, Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary.
“The tariffs have been especially onerous on small businesses and low and middle-income households,” she wrote. “If the Supreme Court overturns these tariffs, it will be a victory for the small businesses. The government will have to refund at least $100 billion, which will infuse cash into the economy in 2026 and boost profits for many businesses.”