“The Most Beautiful Word”: Implications of Two Tariff Cases for Executive Power
On November 5, the Supreme Court began to hear oral arguments in Learning Resources v. Trump and Trump v. V.O.S. Solutions, two cases concerning President Donald Trump’s unilateral imposition of tariffs on U.S. imports. The central statutory question in both cases is whether Trump has exceeded the power of “regulat[ing] … importation or exportation” that the International Emergency Economic Powers Act of 1977 (IEEPA) confers to the president in the event of “any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States.”
There is no clear consensus among legal commentators on how the Supreme Court will rule. Some point out that just last year, the Court introduced a novel “major questions” doctrine to limit unilateral executive policymaking on questions of “vast economic and political significance,” so a strict interpretation of IEEPA would be consistent with its apparent suspicion of executive power. On the other hand, others view the Trump tariffs as in line with a long history of Court-approved unilateral presidential diplomacy. Whichever way the Court rules, however, the implications will be far-reaching both for American fiscal policy and executive authority—and not just because the president has deemed it “one of the most important decisions in the history of the Supreme Court” and suggested “I have an obligation to go there.”
The most direct and immediate impact the ruling will make, of course, concerns fiscal policy. The Trump administration has used tariffs not just to protect domestic manufacturing but also to raise revenue in a way that has not been seen for over a century: the federal government raised nearly $90 billion under IEEPA alone between January 20 and September 23, making up more than half of fiscal year (FY) 2025 tariff revenues, including other Trump-era tariffs and all Joe Biden-era tariffs. If the Supreme Court agrees with Trump’s interpretation of the law, revenue can continue to be raised as such, potentially even making a noticeable dent in the federal budget deficit. Assuming no marked changes in administration policy or economic factors impacting trade, the IEEPA tariffs are projected to bring in a significant revenue of $135 billion over a full year.
But if the IEEPA tariffs are struck down, the fiscal consequences will range significantly beyond the non-collection of revenue and thereby an exacerbated deficit. For one, Trump himself conceded in an October Fox Business interview that “if that [the Supreme Court finding the tariffs unconstitutional] happened, we’d have to pay back money” to American businesses hurt by the tariffs. Although losses faced by foreign companies exporting into the U.S. are not necessarily equivalent to their price hikes on American importers, such a compensation scheme would still demand significant expenditures of the federal government: the $90 billion already raised, for example, would represent a 7.5% increase in the projected $1.8 trillion deficit for FY 2026.
More broadly, the tariff cases are emblematic of the shift of traditionally recognized legislative authority to the executive. Trump is not the first president to call on emergency powers to act alone in areas where Congress has historically had a say: Joe Biden, for instance, issued student debt cancellations during the COVID-19 emergency. Now, Trump has relied on similar reasoning to threaten to unilaterally impose tariffs as a negotiating tactic in dealings with various foreign countries. Perhaps the most famous example of this economic hardball was his threat to raise tariffs on the European Union from 1.2% to 30% to secure European purchases of American energy and military equipment, but that leverage would likely be eroded under a weakened IEEPA, as Trump would need congressional approval for similar wide-ranging tariff hikes from a Congress full of tariff skeptics—a fact his foreign counterparts at the negotiating table would be fully aware of.
Furthermore, even if the Court finds that Congress did indeed intend to endow the president with the wide-ranging authority Trump claims, it could still invoke the nondelegation doctrine, which dictates that Congress may not transfer powers assigned to it by the Constitution to other branches of government. This outcome is less likely than a narrower ruling on the proper interpretation of the statute alone, but it is certainly an option for a Court that has been increasingly willing to challenge precedent concerning the relationship between the executive and legislative branches, as it did recently in Loper Bright Enterprises v. Raimondo (2024).
In sum, it is evident that the Supreme Court is not just deciding the legality of an individual fiscal policy but rather causing a significant downstream impact on the deficit and executive power. It remains unclear when the decision will be handed down by the justices, but either way, it will be difficult to view it as much less momentous than it is in Trump’s characterization.