Accounting
Presidential tariff power faces Supreme Court test
The Supreme Court heard oral arguments on Nov. 5 in a case that will determine whether presidents may use emergency powers to levy broad tariffs.
The question in this case is whether the International Emergency Economic Powers Act permits a president to overhaul trade policy without congressional approval.
The issues concern the constitutional division of taxing power, the potential role of Congress in determining trade rules, and the immediate costs to businesses and households.
Appeals court says no
The Court of Appeals for the Federal Circuit has already ruled in favor of the challengers in a 7-to-4 ruling this August. In V.O.S. Selections, Inc. v. Trump, the court ruled the tariffs are not authorized by IEEPA. The court held that whenever Congress has given presidents tariff power, it has done so explicitly using words like “tariff” or “duty” and incorporating specified limits and processes. IEEPA does neither. There is no mention of tariffs in the statute’s text. The court ruled it was not probable that Congress had meant to grant unlimited tariff power through a general statute directed toward targeted sanctions.
What the government argues
The administration’s defense centers on the statutory language. IEEPA permits the president to “regulate” “importation” when a national emergency is declared. Solicitor General John Sauer argued that tariffs were used for decades to regulate imports and the statute’s broad language allows the executive the flexibility it needs when it comes to foreign matters. The government said tariffs could be used as leverage to influence foreign countries in changing behaviors that are a threat to national security. Speed matters too. A president sometimes must act faster than Congress can .
What the challengers say
The challengers believe differently. The Constitution grants taxation powers to Congress under Article I. Tariffs are taxes on imports. For the past 200 years, Congress has written tariff schedules and set trade policy through specific law. When Congress passed legislation delegating tariff authority to presidents, it has always employed explicit language and added safeguards.
They point out that IEEPA doesn’t mention tariffs and that no president has relied on IEEPA for tariff power in its 48-year run. Making IEEPA a vehicle for general duties would assign a central congressional authority to the president, without the clear indication that the Constitution requires this.
What did the justices ask
The justices questioned each side during more than two hours of debate. Some worried that wide reading of IEEPA would allow a president to use tax-like levies in the absence of congressional permission. The questions expressed concern about setting precedent and the separation of powers. Overall, the justices consider this a case about institutional limits and presidential power, not merely tariff rates.
The economic cost
Economists who filed briefs stress the price tag. Tariffs increase prices of consumers and companies that require imported materials. Through August 2025, importers paid close to $89 billion in IEEPA tariffs.
According to the
Real business impact
Many businesses are already getting squeezed. Learning Resources, a plaintiff in the litigation, said paying the IEEPA tariffs in 2025 would cost it $100 million, from $2.3 million in 2024. Companies are facing uncertainty no matter how the court rules. If the tariffs decrease, companies will seek refunds via what can be a complicated claims process. If the tariffs survive, companies will need to adjust to a world in which tariff prices can skyrocket on just a moments’ notice.
The legal framework
This case features two legal doctrines. The major questions doctrine asks whether Congress was unambiguous when delegating authority over policies that have significant economic or political implications. The Federal Circuit found that the broad tariffs satisfied that standard and found that IEEPA did not express clear authorization. The statute simply refers to regulating imports in general terms and doesn’t explicitly invoke tariffs, duties or taxes, unlike the numerous statutes that do delegate the power to impose tariffs.
The government replied that the language of IEEPA was clear enough and that the word “regulate” historically encompassed the power to impose tariffs. The government also contends that in other areas, like foreign affairs and national security, Congress grants presidents wide-ranging powers. The court’s decision is to decide whether general authority to “regulate” “importation” is sufficient for economically significant tariffs or is an act that requires specific authorization.
The opponents also raise the nondelegation doctrine, which holds that Congress cannot assign powers that are strictly legislative. Some lower courts found that reading IEEPA to authorize sweeping tariffs would constitute an unconstitutional transfer of Congress’s taxing power. The government argues that IEEPA meets constitutional standards because it asks the president to point out an unusual threat and to respond to it. The Supreme Court has only struck down statutes under nondelegation twice, both in 1935.
History matters
The government cites United States v. Yoshida International, a 1975 decision that upheld President Nixon’s temporary 10% tariff under IEEPA’s predecessor statute, using the same language. The challengers counter that Yoshida involved a limited measure during a balance of payments crisis, not blanket tariffs across all imports. Crucially, no president has invoked IEEPA on tariffs across its whole history from 1977 to 2025.
What comes next?
If the Supreme Court upholds the Federal Circuit, Congress maintains control over broad tariff policy unless it clearly delegates that power. If the court sides with the government, future presidents of either party may assert an identical sort of power under emergency declarations.
In September, Treasury Secretary Scott Bessent said the government would have to refund roughly half its $89 billion in IEEPA tariff income if it lost. Tax advisors, accountants and corporate counsel must be prepared. Refund claims may need to be submitted to applications for each import affected. Contracts, supply agreements and economic forecasts could change as tariffs shift.
The court will determine whether Congress intended for IEEPA to include tariffs or whether it gave presidents a narrower weapon for financial sanctions. The answer decides who rules trade policy, and to some extent, federal taxing authority. A ruling is expected no later than summer 2026.
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