Court Clash

Supreme Court Weighs on Legality of President Trump’s Tariffs

The Supreme Court is hearing arguments on whether the sweeping global tariffs set by the White House earlier this year are legal.

President Donald Trump used a decades-old emergency powers law, intended for national security, to assign tariffs to nearly all US trading partners. The court will weigh whether the law can be used for this purpose.

The ruling is set to define how much power this administration and future presidents have over the US trade.

What Is IEEPA, Anyway?

The International Emergency Economic Powers Act (IEEPA) is a 1977 law that lets presidents take economic action during a national emergency, especially when the threat comes from abroad.

• Presidents have used it to impose sanctions and block assets.
• Trump's administration used IEEPA to justify tariffs on dozens of countries, citing trade deficits and fentanyl flows as threats.
• No president before has used IEEPA to impose tariffs.

Tariffs currently begin at 10% for many countries and climb as high as 50% on imports from India and Brazil.

Why This Matters to the Global Economy?

If the Court sides with The White House, any future presidents could slap tariffs on imports anytime. This could lead to higher prices and volatility for global markets.

The tariffs could generate $3 trillion in revenue by 2035, according to the Committee for Responsible Federal Budget.

If the Court sides against The White House, trade policy becomes steadier, but businesses might demand refunds on past duties. This sum could rack up to more than $750 billion, according to Treasury Secretary Scott Bessent.

Either way, import-heavy sectors and manufacturing stocks could feel the shock.

What the Justices Are Asking

The US constitution grants Congress the power to tax and set tariffs. The White House argues that these tariffs are for regulating imports for national security purposes — not for the purpose of raising revenue.

Key questions for the bench:

• Can a trade deficit count as an “emergency”?
• Did Congress ever intend this law to cover tariffs?
• If tariffs act like taxes, shouldn’t Congress approve them?
• Would limiting Trump’s powers now tie future presidents’ hands?

The Supreme Court currently has a 6-3 majority of conservative-leaning judges.

What Should the Investors Watch

Legal rulings can move asset prices just like earnings do. So far, tariff announcements have triggered price swings throughout the year, but — overall — the US stocks have had a strong run.  

The hearings just started on Wednesday. It is unclear when the court will give out its ruling.

The normal timeframe could take it to next summer, but the White House has urged the court to fast-track the decision.