Supreme Court Could Clip Trump’s Tariff Power

How a constitutional showdown could reset global trade

On October 14, the Supreme Court will hear one of the most consequential trade cases in modern American history. At issue is whether the president of the United States can, on his own, impose tariffs on nearly every good entering the country — reshaping global commerce at a stroke. For European automakers in Frankfurt, Chinese exporters in Guangzhou, and ministers in Brussels, the question is existential: are America’s trade policies dictated by Congress, or by the occupant of the Oval Office?

The answer could undo Donald J. Trump’s most powerful economic weapon. Or it could cement a doctrine of presidential trade unilateralism that would redefine America’s role in the world economy.

At the Heart of the Dispute

The case, VOS Selections, Inc. v. United States, stems from Mr. Trump’s sweeping tariffs, which he imposed by invoking the International Emergency Economic Powers Act (IEEPA), a 1977 law typically used for sanctions and embargoes.

A federal appeals court has already said no. In a 7–4 ruling, the U.S. Court of Appeals for the Federal Circuit concluded that Mr. Trump exceeded his authority. The fentanyl crisis and persistent trade deficits, the court ruled, were too tenuous to justify tariffs of 15–200% on everything from German cars to French handbags. “It seems unlikely,” the judges wrote, “that Congress intended to grant the president unlimited authority to impose tariffs.”

The tariffs, however, remain in place. The court granted a stay until October 14, giving the administration time to appeal. Now the Supreme Court must decide: does IEEPA give the president the unilateral right to tax imports?

Two Diverging Futures

At stake are two starkly different outcomes:

Scenario 1: Court Strikes Down Trump’s Tariffs (legal analysts say this is the likelier outcome)

What happens: The Court rules that IEEPA cannot be used to impose tariffs. That power reverts to Congress, consistent with the Constitution’s directive that only the legislature may “lay and collect taxes, duties, imposts and excises.” Future presidents are confined to existing trade statutes, like the 1974 Trade Act, which allows tariffs of up to 15% for 150 days unless Congress extends them.

Impact on Europe: Tariffs of 15% vanish almost overnight. German cars regain competitiveness, French luxury goods flow back into U.S. stores, and Italian machinery shipments rebound. Brussels shelves retaliatory levies, easing tensions that had frayed transatlantic relations.

Global picture: Supply chains stabilize. Businesses face less need to hedge against tariff shocks. Congress, long marginalized in trade debates, reasserts its constitutional role. The age of tariff-by-tweet ends.

Yet striking down Trump’s tariffs would not leave presidents powerless. They could still reach for Section 232 of the Trade Expansion Act (national security tariffs), Section 301 (retaliation against unfair practices), or Section 122 of the Trade Act (temporary duties). But each tool has procedural checks, making another era of boundless tariff escalation unlikely.

Scenario 2: Court Upholds Trump’s Tariffs

What happens: The Court reverses the lower ruling, affirming that IEEPA can be stretched to cover tariffs. The president retains sweeping authority to declare an “economic emergency” and unilaterally rewrite America’s tariff schedules.

Impact on Europe: High tariffs remain. EU exporters face a semi-permanent trade wall, and retaliatory measures on U.S. goods persist. Exporters from Canada, Mexico, and Asia, all swept up in the duties, continue to face uncertainty.

Global picture: Markets adjust to volatility as the norm. Corporations build tariff contingencies into pricing and supply chains. Trade becomes not a rules-based system anchored in Congress, but a geopolitical instrument wielded by whoever occupies the White House.

Here lies the deeper irony: if the Court embraces executive unilateralism, it will have to explain why it rejected President Biden’s student-loan forgiveness for lacking congressional sanction while upholding Trump’s rewrite of America’s tariff regime — one of the largest exercises of unilateral economic power in a century.

Why It Matters

This case is not only about steel, soybeans, or German sedans. It is a constitutional reckoning over the balance of power.

Congress has historically delegated limited trade powers to the president but always with boundaries — time limits, percentage caps, procedural requirements. Mr. Trump’s use of IEEPA tore through those guardrails. No president before him had invoked the law to tax imports. To do so, critics argue, collapses the distinction between targeted sanctions and wholesale tariff regimes.

For businesses, the ruling will determine whether trade policy is predictable or perpetually volatile. By July, tariffs had generated $142 billion in revenue for Washington. But for manufacturers, farmers, and retailers, that sum represents stalled investment, distorted supply chains, and higher consumer prices.

For America’s allies, the stakes are geopolitical. A ruling against Trump would reassure partners that trade policy is rooted in law, not personalities. A ruling for him would affirm that Washington’s economic commitments can be overturned with a declaration of emergency — unsettling the global order.

The Coming Reckoning

The Supreme Court, with its conservative 6–3 majority, has traditionally shown deference to presidents on matters of national security. Yet many conservative and libertarian legal scholars argue that IEEPA was never meant for tariffs. The Court must now decide: does presidential discretion extend this far, or does Congress’s explicit constitutional power over tariffs prevail?

Either way, the decision will reverberate beyond trade. It will define the outer limits of executive power — in economic policy, in foreign affairs, in the separation of powers itself.

Until then, governments wait, companies hedge, and $142 billion in tariffs keeps flowing into U.S. coffers. The Court’s ruling will either dismantle the president’s unilateral trade arsenal or enshrine it.

At stake is nothing less than the question that has haunted American democracy since its founding: who decides — the people’s representatives, or the president alone?

Written by George Chanturia, Founding Partner at Argo Advisory

Argo Advisory | Published: September 2025

Sources:

Financial Times | Trump tariffs face Supreme Court test

Wall Street Journal | Legal uncertainty clouds global trade

European Commission | EU responses to U.S. tariffs