Foreign-Trade Zones Wonder What’s Next For IEEPA

In one of the biggest cases of the year, Supreme Court justices are grappling with challenges to President Trump’s reciprocal and fentanyl tariffs. In the short term, the outcome of the case could determine whether the president can continue to rely on a 1977 emergency law to impose tariffs without authorization from Congress. In the longer term, the decision by the court could have profound implications for limits on presidential power.

The justices agreed to hear the case on an expedited schedule. The court typically announces its decisions by the end of June or early July, but a decision in this case could come much sooner because of its impact.

During opening arguments in the case last month, even conservative justices appeared skeptical of the Trump administration’s stance on the tariffs. (more)

“I mean, these are kind of across the board,” Justice Amy Coney Barrett, who is seen as a critical vote, said to Solicitor General D. John Sauer. “And so is it your contention that every country needed to be tariffed because of threats to the defense and industrial base? I mean, Spain? France?”

Chief Justice John G. Roberts Jr., too, queried the administration lawyer about the president’s authority to impose these specific tariffs. The chief justice acknowledged that the tariffs were used “in dealings with foreign powers,” but he added that “the vehicle is imposition of taxes on Americans,” which he noted had “always been the core power of Congress.”

Justice Neil M. Gorsuch pushed Mr. Sauer on whether there would be any guardrails that would prevent Congress from “just abdicating all responsibility to regulate foreign commerce — for that matter, declare war — to the president.”

The justices repeatedly returned to a central question during the oral argument: Are the tariffs a type of tax, or something else?

This is a key point because the challengers argue that the president overstepped his authority by imposing the tariffs. They argue that tariffs are taxes, and they point to clear language in the Constitution that gives Congress the power to tax.

In his opening statement, Neal K. Katyal, the lawyer representing the plaintiffs challenging the IEEPA tariffs, insisted that “tariffs are taxes” and that the measures “take dollars from Americans’ pockets.” He added that the nation’s founders “gave that taxing power to Congress alone” and that Congress has only delegated tariff powers to the executive branch “explicitly, always with real limits.”

Justice Gorsuch said he was concerned that a decision upholding the president’s tariffs could lead to a “one-way ratchet” toward more power in the executive branch and “away from the people’s elected representatives” in Congress.

Mr. Katyal, argued that the government has plenty of other legitimate authorities that allow it to issue tariffs. He also made the point that the language in those tariff statutes is very different from IEEPA, suggesting that when Congress passed it in 1977, lawmakers did not view it as a tariff law.

In striking down the reciprocal tariffs in May, the U.S. Court of International Trade ruled that the president couldn’t use emergency powers to combat trade deficits.

That is partly because Congress had specifically given the White House limited authority to address the problem in another statute: Section 122, also of the Trade Act of 1974. That allows the president to impose tariffs of up to 15% for up to 150 days in response to unbalanced trade. The administration doesn’t even have to conduct an investigation beforehand.

But Section 122 authority has never been used to apply tariffs, and there is some uncertainty about how it would work.

In both of his terms, the President has used of his power under Section 232 of Trade Expansion Act of 1962 to impose tariffs on imports that he deems a threat to national security.

Section 338 of the same law authorizes the president to impose tariffs of up to 50% on imports from countries that have discriminated against U.S. businesses. No investigation is required, and there’s no limit on how long the tariffs can stay in place.

In September, Treasury Secretary Scott Bessent told Reuters that the administration was considering Section 338 as a Plan B if the Supreme Court ruled against Trump’s use of emergency powers tariffs.