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The Supreme Court on Wednesday appeared doubtful about buying into the Trump administration’s rationale to justify its aggressive tariff strategy, with justices on both sides of the political aisle expressing great skepticism. The nine justices grilled Trump’s Solicitor General John Sauer for nearly three hours on the Trump administration’s decision to use the International Emergency Economic Powers Act (IEEPAA), a 1970-era law invoked during national emergencies, to justify imposing sweeping tariffs across the globe. Central to the debate was the so-called major questions doctrine, which requires government entities, in this case, the president, to have explicit authority from Congress to carry out measures with “national significance.” Chief Justice John Roberts underscored that IEEPAA has never been used to justify tariffs in the past. Sauer argued that the law allows the executive branch to regulate imports, which includes tariffs, since the president also has purview over foreign policy. Featured Video An Inc.com Featured Presentation But even the court’s conservative justices seem unpersuaded by that argument, with Justice Neil Gorsuch underlining how future presidents may liberally use IEEPA for their own benefit, like imposing tariffs on gas-guzzling cars as a way to deal with the “extraordinary threat” of climate change. At one point, Justice Sonia Sotomayer, one of the court’s liberal justices, shot down Sauer’s claim that the tariffs are not taxes. “It’s a congressional power, not a presidential power, to tax,” Sotomayer said. “You want to say tariffs are not taxes, but that’s exactly what they are – degenerating money from American citizens’ revenue.” More than a few businesses would likely agree with that sentiment, as entrepreneurs nationwide have contended with steep price increases in recent months. A group of small business plaintiffs filed suit to stop the tariffs, and the high court’s decision to hear the case is rooted in a string of lower court losses for the administration. A decision from on the high-stakes case may not come for weeks, if not months. They have until June of next year to do so. Even if the Supreme Court rules in favor of the states and small businesses that originally brought the case to court, there are other mechanisms that the Trump administration might use to justify its tariff strategy. That’s according to Michael Cornett, a tax lawyer and managing director at Forvis Mazars, an accounting firm headquartered in Springfield, Missouri. One avenue is using Section 338 of the Tariff Act of 1930, which allows the president to levy retaliatory tariffs of up to 50 percent on other nations if foreign nations have lobbed “unreasonable” duties against the U.S. Trump has long argued that countries have ripped off the U.S. for decades. “Justice Alito raised the issue that the President could impose Section 338 tariffs if he were to lose this case, which is solely focused on IEEPA,” Cornett said. “This reinforces that [..] the tariff debate will continue; This would be consistent with the Court’s approach to address issues narrowly and not address future impacts of a narrow decision.”
