Do Tariffs = Taxes? Supreme Court Appears Skeptical Of White House Argument
The Supreme Court heard arguments over a key piece of President Trump’s economic policy on Wednesday— his sweeping tariff agenda.
Notably, some members of the Supreme Court’s conservative majority — including Chief Justice John Roberts and Justice Neil Gorsuch — signaled skepticism over President Trump’s use of a 1977 emergency law to impose sweeping tariffs on goods from more than 100 countries. They suggested the move may violate the Constitution and Congress’s exclusive power to tax.
How we got here: Trump’s sweeping tariffs average nearly 18%, up from 2.4% before his return to the White House, according to economists at Yale’s Budget Lab.
Lower courts have already ruled that Trump lacked the authority under the 1977 International Emergency Economic Powers Act, a law intended for national security crises, to impose “reciprocal” tariffs after businesses affected by the tariffs and 12 states, most of them Democratic-led, brought the lawsuit. The Trump administration appealed that decision to the high court.
The case could prove pivotal to the Trump administration’s trade and economic agenda. Trump posted Tuesday night that the case was “literally, LIFE OR DEATH for our country.”
“The vehicle is the imposition of taxes on Americans, and that has always been a core power of Congress,” Roberts said.
WHAT’S AT PLAY
The Supreme Court is now weighing whether the president overstepped Congress’s constitutional authority to regulate foreign commerce.
Solicitor General John Sauer argued on behalf of the White House that the tariffs were meant to influence or restrict foreign trade, not raise revenue. He argued the president has the authority to do so during national emergencies.
Liberal Justice Sonia Sotomayor countered, “You say tariffs are not taxes, but that’s exactly what they are.”
Justice Gorsuch also pressed Sauer on whether Congress had effectively “handed off” too much power to the executive branch under the administration’s argument.
“Congress, as a practical matter, can’t get this power back once it’s handed it over,” Gorsuch said. “The president’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.”
Sauer disagreed, saying that Congress could terminate emergencies.
If upheld, the tariffs could generate $3 trillion over the next decade, but much of it ultimately paid by U.S. businesses and consumers through higher prices.
The legal principals at play: The “intelligible principle test” and Major Questions Doctrine, came up during arguments.
The Intelligible Principle Standard is a legal standard used to determine if Congress has unconstitutionally delegated its legislative power to the executive branch, violating the separation of powers.
The Major Questions Doctrine requires executive branch actions of vast economic and political significance to be clearly authorized by Congress. It was one of the legal principles used to strike down Biden administration priorities like broad student loan forgiveness.