Revisiting Presidential Tariff Powers: From Yoshida to Learning Resources v. Trump
On November 2nd, 2025, President Donald Trump expressed on NBC’s 60 Minutes that “tariffs are incredible because they really give us great national security and great wealth.” The national security part is perhaps arguable, but the family-owned Learning Resources Ltd., as well as countless other American businesses, did not experience great wealth—quite the contrary. After Trump imposed his “Liberation Day” tariffs in April 2025, which involved a “baseline” tariff of 10% on almost all imports into the U.S, over half (57%) of U.S. companies surveyed by KPMG reported declining gross margins as a direct result of these tariffs. Small and mid-sized businesses were hit especially hard because, unlike large firms with abundant inventories, they are more vulnerable to cost shocks and supply chain disruptions. With such daunting economic consequences, how did Trump justify his policies? He imposed his tariffs through the International Emergency Economic Powers Act (IEEPA) of 1977, which grants President authority during times of emergency. In this specific instance, the two emergencies are the U.S. trade deficit and the inflow of fentanyl and opioids, which he called “country-killing emergencies.” However, it is uncertain whether Trump’s tariffs fit the conditions of IEEPA as the recent Supreme Court oral arguments demonstrate.
Learning Resources Ltd. took the lead in voicing the damage that Trump’s tariffs have inflicted on U.S businesses that rely on imports. As an educational company that outsources most of its manufacturing to China, it experienced a 44-fold increase in production costs from $2.3 million in 2024 to $100 million in 2025. This sharp increase is due to Trump’s “trafficking” and “reciprocal” tariffs on China that combine to over 145%. While Learning Resources Ltd., was large enough to absorb the loss and pursue litigation, countless less fortunate firms have gone bankrupt. For its financial injury, Learning Resources Ltd. filed a lawsuit in the U.S. District Court for the District of Columbia on April 22, 2025, shortly after the Liberation Day tariffs. On May 29, 2025, the district court issued a preliminary injunction, concluding that IEEPA did not give the president authority to impose tariffs and determining that the measures posed an existential risk to the plaintiffs’ businesses. However, Trump appealed to the U.S. Court of Appeals for the D.C. Circuit, and the injunction order was quickly stayed. Meanwhile, the U.S. Court of International Trade reached a similar conclusion in related cases of American companies receiving identical injuries, but its ruling was also stayed by the Circuit Courts pending further review. Upon request by the petitioner, Learning Resources Ltd., the Supreme Court granted expedited relief and heard the case on November 5, 2025.
Solicitor General D. John Sauer argued that Trump’s tariffs are in line with the “regulate importation” clause of IEEPA, citing the Court of Customs and Patent Appeals precedent United States v. Yoshida International, Inc. (1975). During the oral arguments, Chief Justice Roberts, Justice Barrett, and Justice Kagan all highlighted that Congress never used the word “tariff” or “duty” in IEEPA. Their statement strengthened the plaintiffs' case, who contended that IEEPA simply does not provide the statutory authority for the President to impose tariffs. Roberts noted that in Dames & Moore v. Regan (1981), the Court had emphasized the narrowness of IEEPA’s scope and rejected the idea that it gave presidents an open-ended economic power. When Justice Barrett questioned the use of the “regulate importation” clause in other statutes, Sauer brought up the Trading with the Enemy Act (TWEA) as interpreted in Yoshida. Enacted during World War I, TWEA gave the president sweeping powers to “regulate, investigate, prohibit, and license” transactions involving foreign nationals or “enemies” during times of war or national emergency, with no explicit mention of tariffs. In 1971, Richard Nixon used TWEA to control the balance-of-payments crisis, setting a 10% temporary surcharge on imports. Yoshida International, a Japanese company affected by the surcharge, argued that the President had exceeded his authority. While the Customs Court upheld Nixon’s decisions, Congress grew uneasy that TWEA let presidents indefinitely declare “emergencies” to justify broad economic actions during peacetime. Hence, a few years later, Congress passed the Trade Act of 1974 to codify what TWEA had left vague, limiting emergency tariffs to 15% and for no more than 150 days. Furthermore, in 1977, IEEPA replaced TWEA for peacetime “unusual and extraordinary” threats, leaving TWEA to be applied only during war. By using the “regulate importation” in IEEPA, Trump is reviving the same inference that Nixon used under TWEA — an interpretation Congress effectively rejected decades ago.
Based on the evolution of legislation delineated above, the President is restricted from bypassing Congress’s Article I powers over commerce and taxation. Under this context, it is difficult for Trump to justify to the Supreme Court that his tariffs are not taxation. The plaintiffs argued that tariffs are essentially duties or taxes on imports. Justice Kagan and Justice Sotomayor affirmed this point, expressing that tariffs are “taxes in all but name,” and that Congress usually specifically writes down the power to tax when they mean the power to tax. This was not the case in IEEPA. Indeed, due to higher input prices, the Tax Foundation estimated that tariffs equate to a nearly $1,300 tax increase per average U.S. household in 2025. With IEEPA requiring mandatory congressional notification and oversight, the question of constitutional separation of powers becomes a major weakness for Trump. During the oral arguments, many Justices framed this case as a major-questions and nondelegation issue. Justice Gorsuch said bluntly that allowing the president to impose “tariffs on any product from any country, for any amount, for any duration” would “neutralize Congress’s power to tax” clearly established in Article I. In response, Sauer argued that the Major Questions Doctrine does not apply, fundamentally because tariffs are not taxes. He maintained that these tariffs are regulatory, not revenue-raising, distinguishing them from taxes under Article I. Yet, Trump has been boasting about the $2000 stipends he will hand out from tariff revenues.
Moreover, Sauer shifted his argument to national security defense, claiming that fentanyl trafficking constitutes “foreign-arising emergencies” under IEEPA. However, most illicit fentanyl enters the U.S. through criminal smuggling networks, not standard commercial import channels subject to customs duties. To this end, the Supreme Court noted that trade restrictions on legitimate goods would do little to intercept synthetic drugs already banned under existing law, weakening the national-security rationale. Evidently, most of the countries that Trump imposed tariffs on do not sell fentanyl to the U.S, and even if the fentanyl crisis was legitimate, the administration has no power to raise tariffs well beyond the 15% mark.
The Court’s doubtful stance suggests the Justices recognize that IEEPA cannot be stretched to do what the Trade Act already covers. In short, the Trade Act governs economic tools like tariffs and quotas, while the IEEPA governs national-security emergencies through asset freezes, sanctions, and export controls (not explicitly tariff or tax policy). Trump collapses this separation by reading the IEEPA as authorizing tariffs. Allowing both to overlap would make the 1974 limits meaningless and effectively let the President bypass Congress whenever he declares an “emergency.” Therefore, it seems likely that the Supreme Court will rule against Trump and at least weaken if not wholly strike down his tariffs.