Supreme Court Justices Question the Constitutionality of Presidential Tariffs Under IEEPA, Focusing on the Separation of Powers Between Regulating Trade and Levying Taxes

Supreme Court LIVE: Hearing on Trump’s tariffs

Tariffs, Scepter, and Scales: How the US Supreme Court Scrutinizes Presidential Trade War Powers

On November 5, 2025, an oral argument at the U.S. Supreme Court, scheduled for 80 minutes, stretched to nearly two and a half hours. Intense questioning from the nine justices transformed a case about tariff legality into a profound examination of a core U.S. constitutional principle: the separation of powers. The case's central question seems simple: does the President have the authority to impose far-reaching, comprehensive tariffs under a law known as the International Emergency Economic Powers Act (IEEPA)?

The answer to this question, however, not only determines whether hundreds of billions of dollars in tariffs collected during President Donald Trump's term must be refunded but could also fundamentally reshape the boundaries of future presidential power in international trade and foreign policy. After the hearing, the market voted with its feet. On the prediction platform Kalshi, the probability of the tariffs being ruled "illegal" soared to 78%. One keen observer judged that the odds of the Trump administration losing had jumped from 51% before the hearing to 70-80%.

Behind this lies a fierce clash of legal text, historical precedent, and constitutional spirit.

"Regulate" or "Tax": The Constitutional Crisis Sparked by a Single Word

The argument from Deputy Solicitor General John Sauer, representing the federal government, revolved around a key verb: "regulate." He insisted that the IEEPA empowers the President to "regulate importation," and tariffs are "one of the most traditional and direct methods of regulating imports."

In his view, the tariffs imposed by the Trump administration were not revenue-raising tariffs but rather "regulatory tariffs." Their ultimate goal was to alter the behavior of trading partners. For instance, he cited tariffs as a bargaining chip that successfully prompted China to cooperate on the issue of "fentanyl precursor chemicals" and unlocked access to rare earth minerals. Sauer emphasized that if tariffs succeed in changing another country's behavior to the point where no one needs to pay them, it proves their "regulatory" rather than "taxing" nature.

Furthermore, he argued that in the realm of foreign affairs, the President possesses broader inherent powers, and congressional delegations of authority should be interpreted more leniently. Therefore, judicial principles that limit executive power, such as the Major Questions Doctrine, do not apply here.

"The One-Way Ratchet": The Justices' Real Concern

However, this position faced severe scrutiny from the justices in the courtroom, particularly the conservatives. Their questions cut to the heart of the matter, moving beyond the tariffs themselves to touch upon the balance of power.

First was the textual absence. Justice Sotomayor pointedly asked: If Congress intended to authorize taxation, why do the words "tariff" or "taxes" not appear anywhere in the IEEPA? She had reviewed some 16 related statutes and found that whenever taxation was involved, Congress was never shy about using these explicit terms.

Second was the concern over unlimited expansion of power. Justice Gorsuch issued a profound warning: If the court accepts the government's logic—that the President can acquire significant powers not explicitly granted in a statute based on an "emergency"—could Congress's core powers, such as the "power to declare war," also be ceded in the same manner?

The most fatal concern was the "one-way ratchet effect." Both Justice Gorsuch and Chief Justice Roberts highlighted this structural problem: once Congress hands over a core power like taxation to the President through a vague statute, it becomes nearly impossible to reclaim. Any bill attempting to claw back that authority would face a presidential veto, requiring an overwhelming majority in Congress to override it. Power thus flows irreversibly from the legislative branch to the executive. This is precisely the scenario the framers of America's separation of powers system sought to prevent.

"A Tariff is a Tax": The Challengers' Simple Yet Powerful Rebuttal

In stark contrast to the government's grand narrative, the challengers' lawyers, Neal Kstyal and Benjamin Gutman, presented a simpler and more constitutionally grounded argument: at its core, a tariff is a tax.

Kstyal noted that taxes have a unique constitutional status because they take money directly from citizens' pockets and deposit it into the U.S. Treasury—an exclusive power granted to Congress in Article I of the Constitution. His research found that Congress has used the word "regulate" approximately 1,490,900 times in legislation, but not once to mean "to tax."

They argued that the IEEPA was designed to limit, not expand, presidential power. It completely lacks the restrictive clauses common in other tariff laws, such as rate caps or time limits. To allow the President to derive the power to impose arbitrary tariffs on any country and any product from the single word "regulate" would be to completely upend America's tariff legal framework of over 200 years.

The Verdict's Aftermath and Plan B

The atmosphere of the hearing and the justices' sharp questioning have led many to believe that the Trump administration's tariff policy is on the verge of being declared unconstitutional. The two straws that may break the camel's back appear to be the fatal flaws in the legal text and the deep-seated fear of the "one-way ratchet effect" eroding the separation of powers.

Although Treasury Secretary Bessent issued a statement immediately after the hearing, blasting the challengers' arguments as "economically absurd" and stressing that "economic security is national security," the Trump team seems to be preparing for a loss. Its backup plan (Plan B) may include:

• Short-term measure: A temporary tariff of up to 15% for 150 days under Section 122 of the Trade Act of 1974.
• Long-term tools: Invoking Section 301 of the Trade Act of 1974 or Section 338 of the Tariff Act of 1930 to impose more targeted tariffs based on "unfair trade practices" or "discrimination against U.S. commerce."

Regardless of the final outcome, this legal battle over the IEEPA has thrust the question of American executive power's boundaries into the spotlight. The Supreme Court's final ruling will not only be a response to the past but also a crucial red line drawn for future presidents' use of economic weapons.