In one of the most important legal cases for President Donald Trump’s administration, the Supreme Court on Wednesday appeared skeptical of the president’s claim for unlimited tariff authority, although some of the justices signaled a potential willingness to give the president some flexibility in foreign trade.
While the Trump administration faced widespread skepticism from the court, some of the justices suggested the president could use tariffs as a tool. regulate trade, rather than generate income.
Such an interpretation of the law at the center of the case could give Trump an opportunity — along with other tariffs that have not been challenged in court — to continue his global trotting mission to reform trade imbalances, even if the high court curtails his broad tariff power.
“It is very important that these are regulatory fees, not revenue-increasing fees,” Attorney General D. John Sauer told the justices. “This policy is by far the most effective if no one ever pays the tariffs.”
Specifically, Justices Amy Coney Barrett and Neil Gorsuch focused on IEEPA language that says a president can “regulate importation” in times of emergency using “licenses, instructions, or other means.”
“We’ve focused on regulating importation, but actually the statute says the president can, by licensing or otherwise, regulate importation,” Gorsuch said. “We’ve had some discussions today about the fact that perhaps the president could simply recharacterize these tariffs as licenses or readjust the scheme so that they are licenses.”
Barrett similarly suggested that the Trump administration could reframe tariffs as licenses to avoid legal scrutiny.
The United States Supreme Court building is seen in Washington, October 4, 2023.
Evelyn Hockstein/Reuters, Files
“Tell me what the distinction is between licenses and fees, if it matters.” she asked. “If there really is no distinction, why can’t it just be called a license here?”
Neal Katyal, who argued on behalf of the small business that brought the case, rejected the idea that simply renaming Trump’s tariffs would solve the legal problem.
“If you did that, it would be indefinite,” he said. “It allows, under the word license… to impose tariffs on the world.”
Overall, most justices were skeptical of the broad interpretation of the 1977 law governing emergency economic powers that the Trump administration claims provides unlimited tariff power. The International Emergency Economic Powers Act gives Trump the power to “regulate importation” but does not explicitly mention tariffs, and some of the justices expressed concern that the current tariffs amount to a tax on American citizens.
“It is a congressional power, not a presidential power, to tax. And one wants to say that tariffs are not taxes, but that is exactly what they are,” said Justice Sonia Sotomayor.
Several justices also expressed concern that no other president or court has determined that the phrase “regulate importation” confers tariff authority.
“Can you point to any other place in the code – or any other time in history – where that phrase, taken together, ‘regulate import’ has been used to confer authority to impose tariffs?” -Barrett asked.
President Donald Trump speaks during an event to announce new tariffs in the Rose Garden of the White House, April 2, 2025.
Mark Schiefelbein/AP, FILE
There was no apparent consensus on whether the Court could completely strike down Trump’s sweeping global tariffs – a centerpiece of his economic agenda – or somehow clarify the limits on its authority; however, Several conservative justices indicated their desire to find a way to preserve Trump’s tariff regime, pointing to the practical considerations of invalidating it and the traditional deference afforded to presidents in foreign affairs matters.
“If you win, tell me how the refund process would work. Would it be a complete disaster?” said Judge Amy Coney Barrett.
“It is absolutely difficult, we do not deny it,” Katyal said later.
The IEEPA has been used to justify nearly 70% of Trump’s tariffs (including his global reciprocal tariffs and tariffs on China, Canada and Mexico) and has resulted in the raising of more than $89 billion. Depending on the Supreme Court’s decision, that money could be returned to companies that already paid the tax on goods they imported into the United States.
Even if the court determines that the IEEPA does not grant unlimited tariff power, the high court could consider defining much more limited authority that falls within Trump’s power. Barrett and Gorsuch floated the idea of using licenses instead of tariffs or tailoring tariffs more narrowly to regulate, rather than raise funds.
“So revenue-generating tariffs are not foreign affairs, but regulatory tariffs are?” Gorsuch asked.
“I don’t think a tariff that raises revenue is a foreign issue, at least to the same degree. I think it has a foreign application, obviously, but I don’t think it would raise the same issues,” Sauer said.
However, Trump’s own rhetoric could run counter to that argument, as the president frequently boasts about the amount of money raised through his tariffs and their impact on the US deficit. On Wednesday, at the same time as Supreme Court oral arguments, he spoke to Florida business leaders about the “big numbers” generated by his tariffs.
“At the same time, my tariffs are generating hundreds of billions of dollars to help reduce the deficit this year by more than 50%. Did you see those numbers? We’re going to go down 50%. Between 25 and 50, but closer to 50%. Who would think of that? Those are big numbers,” Trump said.
