What to watch for as the Supreme Court reviews Trump’s sweeping global tariffs

By John Fritze, CNN

(CNN) — When the Supreme Court meets Wednesday to hear oral arguments over President Donald Trump’s sweeping emergency tariffs, the justices will be debating more than a controversial policy with vast implications for the global economy.

It will also be deciding the limits of a president’s power – an area in which the court’s 6-3 conservative majority has repeatedly sided with Trump since he began his second term in January.

The case, the most significant involving the American economy to reach the court in years, will determine the fate of Trump’s “Liberation Day” tariffs, as well as duties he has imposed on imports from China, Mexico and Canada. At stake are tens of billions of dollars in revenue the administration has already collected and potentially trillions more – and the resolution of a power struggle that both sides have framed in existential terms.

Here are some key points to watch as the nine justices take their seats to hear the case at 10 am ET.

Can Trump do it?

The blockbuster battle over tariffs will likely be decided based on how a majority of the court defines a single word: “regulate.”

Trump has relied on a 1970s-era emergency law, the International Emergency Economic Powers Act, or IEEPA, to levy the import duties. That law allows a president to “regulate … importation” during emergencies. The administration argues the word plainly includes the power to impose tariffs, since tariffs are the most common way a government regulates imports.

But the small- and medium-sized businesses challenging Trump note that the law – at no point – uses the words “tariffs” or “duties.” A far more logical reading of the law, they say, is that it allows a president to impose sanctions on other countries during emergencies. After all, they point out, Trump has other laws at his disposal that he could use to raise tariffs to deal with trade imbalances.

It’s just that those other laws have limits and IEEPA, for the most part, does not.

Lower courts have consistently sided against Trump in the two cases now before the Supreme Court, though they have spelled out different rationales and implications – something the Justice Department has pointed out.

In one case, led by V.O.S. Selections, a New York-based wine and spirits company, a divided Federal Circuit Court of Appeals ruled that IEEPA might permit some tariffs, just not the widespread duties Trump has carried out. In another case, led by an educational toy company called Learning Resources, a federal district court in Washington, DC, ruled that the law likely didn’t grant the president power to impose the tariffs at all.

Enter Joe Biden

The Supreme Court was clear in case after case involving President Joe Biden that an administration cannot take certain actions without explicit authorization from Congress. That is particularly true, the court has repeatedly ruled, when policies involve “major” political or economic questions.

Two years ago, the court’s conservative majority relied on what’s known as the “major questions doctrine” to block Biden’s student loan forgiveness plan. A year earlier, the court stopped Biden’s vaccine and testing requirement for 84 million Americans, concluding that Congress never explicitly gave the government the power to demand those measures during the Covid-19 pandemic.

The small businesses challenging Trump say the same logic should apply to the tariffs. The law Trump is relying on, they point out, never uses the word “tariff.”

How the conservative justices wrestle with that argument may tell observers everything they need to know about where the court is heading in this case.

Trump has offered the court a few arguments to bypass the doctrine that was repeatedly used against Biden. First, the administration says, those earlier cases involved agencies taking action – like the Department of Education when it came to student loan forgiveness. Second, Trump argues, the tariffs implicate foreign affairs, where a president has long been given a lot of leeway by the other branches.

If key justices quickly distinguish the Biden-era cases on one of those grounds, that will be a good sign for the Trump administration.

Enter Richard Nixon

Trump is relying, at least in part, on a similar effort undertaken by President Richard Nixon more than five decades ago.

Back in 1971, Nixon imposed a 10% tariff on all imports – which the administration later justified under the Trading with the Enemy Act, a precursor to IEEPA that was enacted during World War I. Notably, that law used identical language to give the president authority to “regulate” imports.
And at the time, a federal appeals court approved those tariffs with the same language.

Lawmakers in Congress were clearly aware of that when they enacted IEEPA with that same language. And that, the Department of Justice has argued, “strongly indicates that both Congress and the public contemporaneously understood that language to encompass tariffs.”

The businesses challenging Trump have balked at that logic. They agree that Congress kept the “regulate” language in place for emergencies but said that, in response to Nixon, Congress also passed a law with clear instructions for when a president could unilaterally impose tariffs to address a trade imbalance.

Trump doesn’t want to use that law, however, because it imposes limits on tariffs – capping them at 15% and permitting them for only 150 days.

How the court’s conservatives weigh that history could influence the outcome of the case, particularly if some signal that Trump’s actions have no historic precedent.

Tariff or a tax?

For years, economists have shaken their heads as the president and other White House officials have repeatedly described tariffs as a duty paid by foreign companies. The debate over how to depict the tariffs has taken on legal significance in the case before the Supreme Court, and how the justices deal with it could provide clues about their thinking.

The small- and medium-sized businesses challenging the tariffs call them a tax, which they note falls squarely within the power of Congress under the Constitution to levy – not a president. Because tariffs are paid “primarily by American businesses,” and ultimately American consumers, the plaintiffs told the Supreme Court in written arguments, the president’s tariffs have “equated to the largest peacetime tax increase in American history.”

Perhaps sensing the danger in that argument, the Department of Justice spent a significant portion of its most recent brief in late October distinguishing between tariffs and taxes. US Solicitor General D. John Sauer, the administration’s top appellate attorney, blasted the plaintiffs for relying on a “repeated, false equivalence between domestic revenue-raising taxes and regulatory tariffs on foreign imports.”

What Trump has imposed under IEEPA, Sauer said, are “regulatory tariffs” on foreign imports to “deal with foreign threats,” which he said, “crucially differ from domestic taxation.”

Vassal States of America

After floating the idea of attending the oral arguments in person on Wednesday, Trump said over the weekend he would skip the session.

Even though the president will be elsewhere, his heightened rhetoric is all over the case. The Justice Department has used unusually striking language to warn the justices about what might happen if the court ultimately rules against the administration.

Sauer has quoted administration officials framing a loss as a “catastrophic” and “ruinous” outcome that would lead to a “dangerous diplomatic embarrassment.” Upholding the lower courts, the administration said, would “accelerate the drift toward America’s decline into a vassal state.”

That language is clearly designed to give the justices pause about the practical implications of their decision, even though the court’s conservatives have long espoused the idea that they make decisions based on the law as they find it, not on potential consequences.

It will be worth watching whether Sauer doubles down on that strategy as he looks up at the bench on Wednesday from the podium.

In response, a dozen states that oppose the administration, criticized the Justice Department for its “hyperbolic rhetoric” and quoted from a concurring opinion from three conservative justices – Neil Gorsuch, Samuel Alito and Clarence Thomas – when the court tossed out Biden’s vaccine requirements.

“The question, as in other recent cases of executive overreach, is: ‘Who decides?’” the states wrote. “Congress, not the president, decides whether and how much to tax Americans who import goods from abroad.”

CNN’s Elisabeth Buchwald contributed to this report.

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