Tariffs have been at the core of Trump's economic agenda. Yet the Supreme Court seems poised to deal Trump a devastating blow by ruling the majority of his tariffs as unconstitutional.

At the hearing last week in Learning Resources, Inc. v. Trump, even some conservative justices on the Supreme Court seemed skeptical of the Trump Administration’s attempts to justify tariffs imposed by it under the International Emergency Economic Powers Act (IEEPA).

Notably, a number of justices did not accept the Administration’s absurd argument that tariffs are not taxes under the Constitution.  John Sauer, the attorney arguing Trump’s case, repeatedly refused to concede that tariffs are taxes, but Justices Roberts, Barrett, and Gorsuch did not seem to buy this argument.  Even Justice Kavanaugh seemed skeptical.

This is hugely important because the power to tax is the exclusive province of Congress, not the Executive branch.  If the Supreme Court were to accept Trump’s argument, this would be a monumental erosion of the separation of powers. 

This is not merely an academic debate about the niceties of the Constitution.  If the Executive Branch is allowed to tax and raise its own revenues without Congressional involvement, why would the president need Congress for anything?  Trump has already ignored Congressional mandates about spending. With control over raising revenues, he would have power over both revenue and spending, giving him virtually complete control over the federal government.

Sauer’s main argument was that, even if tariffs are considered taxes, under IEEPA, Congress delegated the power to impose tariffs to the president in the event that he declares an emergency.  Most of the hearing focused on this argument, with the majority of the justices being skeptical of Trump’s position, although not dismissing it out of hand as they did with the notion that tariffs are not taxes. 

The concern expressed by the justices is that the IEEPA does not mention tariffs or taxes, so it is difficult to infer that Congress intended that statute to delegate the power to tariff to the president. 

Sauer’s argument was that IEEPA gives the president the power to “regulate” foreign commerce in the event of an emergency, and the word “regulate” is broad enough to include the imposition of tariffs. He contended that the tariffs were “regulatory” because their primary purpose is not to generate revenue, but to influence the behavior of foreign countries.   Despite the fact that it is public record that the tariffs have raised $164 billion or more this year (Trump has even boasted about this), he argued that revenue generation was merely an “incidental”.

Listening to the hearing, it did not appear that Sauer’s arguments were persuasive to any of the justices other than Alito and Thomas, although Kavanaugh was hard to read.  Several justices pointed to the “major questions doctrine,” which says that, if Congress intended to address a major question when it enacts legislation delegating power to the president, such delegation must be explicit, not implicit.  This doctrine previously was used to strike down President Biden’s student loan forgiveness program, so intellectual consistency would seem to require it also apply to strike down Trump’s tariffs under IEEPA.

Several justices also seemed concerned that, if they accepted Trump’s position, too much Congressional power would be permanently given to the Executive.  Justice Gorsuch seemed to hit the nail on the head with his comment that delegation of a major issue like taxation is a “one-way ratchet,” where it is virtually impossible for Congress to get delegated power back (as clawing it back would need a super-majority to overcome a presidential veto), and thus could lead to permanent erosion of the separation of powers.

Unlike the decision in the U.S. Court of International Trade (CIT) (the lower court that initially heard the case), there was not much discussion about the legitimacy of the alleged “emergencies” used by Trump to invoke IEEPA.  There were some off-handed remarks by justices about the fact that IEEPA requiring an emergency declaration did not provide much of a guardrail in light of the court’s inclination to give significant deference to presidential emergency declarations. 

But alarmingly, Sauer took the position that presidential emergency declarations cannot be reviewable at all by the courts.  It is unlikely that this contention will be addressed by the Supreme Court when it decides Learning Resources, as it can rule that the tariffs are unlawful because IEEPA does apply, without deciding whether Trump’s concocted emergencies are justified.  However, if the Supreme Court were to accept Sauer’s position, this could lead to unchecked presidential power in many areas.  For example, will the Supreme Court allow Trump to deploy troops to American cities, or even invoke the Insurrection Act, on the basis of “emergencies” that are pretexts with no factual basis?