On November 5, the Supreme Court heard oral arguments in the cases challenging President Trump’s use of emergency powers to levy sweeping global tariffs. Justices from both ideological camps questioned whether the International Emergency Economic Powers Act (IEEPA), commonly used for sanctions, also allows the president to impose tariffs without congressional approval. Since the cases could unwind one of the president’s key economic policies and erode leverage in ongoing trade negotiations, the court agreed to expedite the case and a decision is expected in the next few months.
Should the justices uphold the tariffs, markets would be mostly unfazed as companies have largely adapted to a trade system based on higher tariffs, though it would heighten concerns about how this court may approach other cases on the limits of presidential authority. A decision prohibiting tariffs under the IEEPA could also trigger refunds to importers and revive trade uncertainty as the Trump administration looks to reimpose the measures under a patchwork of other trade laws.
In this Economics Weekly, Richard de Chazal considers the possible outcomes of a Supreme Court ruling and what they could mean for trade policy.