Trump's global tariffs up for Supreme Court review

The US Supreme Court agreed on Tuesday to decide the legality of Donald Trump's sweeping global tariffs, setting up a major test of one of the Republican president's boldest assertions of executive power that has been central to his economic and trade agenda.

The justices took up the Justice Department's appeal of a lower court's ruling that Trump overstepped his authority in imposing most of his tariffs under a federal law meant for emergencies. The court swiftly acted after the administration last week requested that it review the case, which involves trillions of dollars in customs duties over the next decade.

The court, which begins its next nine-month term on October 6, placed the case on a fast track, scheduling oral arguments for the first week of November.

The US Court of Appeals for the Federal Circuit in Washington ruled on August 29 that Trump overreached in invoking a 1977 law known as the International Emergency Economic Powers Act, or IEEPA, to impose the tariffs, undercutting a major priority for the president in his second term. The tariffs, however, remain in effect during the appeal to the Supreme Court.

Read: US court rules Trump’s global tariffs illegal

The appeals court ruling stems from two challenges. One was brought by five small businesses that import goods, including a New York wine and spirits importer and a Pennsylvania-based sport fishing retailer. The other was filed by 12 US states - Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont - most of them governed by Democrats.

The Supreme Court also agreed to hear a separate challenge to Trump's tariffs brought by Learning Resources, a family-owned toy company.

The levies are part of a global trade war instigated by Trump since he returned to the presidency in January that has alienated trading partners, increased volatility in financial markets and fueled global economic uncertainty.

Trump has made tariffs a key foreign policy tool, using them to renegotiate trade deals, extract concessions and exert political pressure on other countries.

Trump in April invoked the 1977 law in imposing tariffs on goods imported from individual countries to address trade deficits, as well as separate tariffs announced in February as economic leverage on China, Canada and Mexico to curb the trafficking of fentanyl and illicit drugs into the US.

Read more: India feels the pinch as Trump doubles tariffs

The law gives the president power to deal with "an unusual and extraordinary threat" amid a national emergency. It had historically been used for imposing sanctions on enemies or freezing their assets. Before Trump, the law had never been used to impose tariffs.

"The fact of the matter is that President Trump has acted lawfully by using the tariff powers granted to him by Congress in IEEPA to deal with national emergencies and to safeguard our national security and economy. We look forward to ultimate victory on this matter with the Supreme Court," White House spokesperson Kush Desai said.

Jeffrey Schwab, a lawyer with the Liberty Justice Center legal group representing small business challengers to Trump's tariffs, said he is confident that the Supreme Court will recognize that the president does not have unilateral tariff power under this law.

"Congress, not the president alone, has the constitutional power to impose tariffs," Schwab said.

'Economic catastrophe'

Trump's Justice Department has argued that the law allows tariffs under emergency provisions that authorize a president to "regulate" imports.

Denying Trump's tariff power "would expose our nation to trade retaliation without effective defenses and thrust America back to the brink of economic catastrophe," it said.

Trump has said that if he loses the case, the US might have to unwind trade deals, causing the country to "suffer so greatly."

The nonpartisan Congressional Budget Office reported in August that the increased duties on imports from foreign countries could reduce the US national deficit by $4 trillion over the next decade.

The US Constitution grants Congress, not the president, the authority to impose taxes and tariffs, and any delegation of that authority must be both explicit and limited, according to the lawsuits.

The Federal Circuit agreed. "It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the president unlimited authority to impose tariffs," it said in a 7-4 decision.

Also read: Trump grants tariff exemptions to US trade partners

The appeals court also said that the administration's expansive view of this law violates the Supreme Court's "major questions" doctrine, which requires executive branch actions of vast economic and political significance to be clearly authorized by Congress.

The New York-based US Court of International Trade, which has jurisdiction over customs and trade disputes, previously ruled against Trump's tariff policies on May 28.

Another court in Washington ruled that the law does not authorize Trump's tariffs, and the administration has appealed that decision as well. At least eight lawsuits have challenged Trump's tariff policies, including one filed by the state of California.

Tim Brightbill, an expert in international trade law at the Wiley Rein law firm, said it was important for the Supreme Court to weigh in as quickly as possible given that it is an "extremely important question involving billions of dollars - potentially trillions of dollars."

Brightbill said that only a handful of trade law cases have gone to the Supreme Court, "so it just shows the extreme importance of this issue across the US economy, and really the global economy."