The Supreme Court has agreed to hear the Trump administration’s appeal of its sweeping tariff regime, much of which was declared unlawful by two lower courts.
On Tuesday, the high court announced it would weigh the legality of the president’s International Emergency Economic Powers (IEEPA) tariffs, along with 25 percent duties on Mexico and Canada related to fentanyl smuggling and mass migration. Should it choose to uphold the recent rulings of a New York Court of International Trade (CIT) and a Washington, D.C.-based United States Court of Appeals for the Federal Circuit, the cornerstone of the administration’s trade strategy could unravel.
Related Stories
The Supreme Court has asked both the government and the plaintiffs—which include more than a dozen state attorneys general and a handful of American businesses—to expedite the filing of case briefings and submit them by Sept. 19.
“On Sept.3, the Department of Justice appealed to the Supreme Court, and they asked them to go quickly. They said, ‘Look, we need to look at this. We want you to move as fast as you can,” said Nicole Bivens Collinson, International Trade and Government Relations Practice Leader with Sandler, Travis & Rosenberg, P.A., during the law firm’s monthly tariff update.
The Supreme Court heeded the administration’s request. The case will be argued the first week of November, with the court allotting an hour to the hearing.
According to Collinson, the Supreme Court will closely examine the rulings of the two lower courts, which decided—and then affirmed the decision—that the president overstepped his executive authority in leveraging the wide-ranging, far-reaching tariffs using IEEPA.
“When you look at the statute—when you look at that law—the word tariffs is not included as part of a remedy,” she said. “The President absolutely is entitled to take action and to try to remedy whatever the emergency is. But the courts looked at it and said, ‘You can take action, but it doesn’t say you can take tariffs.’”
While the legal drama plays out, companies are still on the hook for the duty bill. “Until this happens, until there’s decision somewhere, we’re still paying these tariffs,” Collinson said. “So even though the initial court cases ruled that these tariffs are illegal, we don’t know if we’re going to get the refunds back yet—or when.”
Treasury Secretary Scott Bessent said over the weekend that forcing the federal government to pay back hundreds of billions of dollars in already collected duties would be a “terrible” outcome for the Treasury. He previously estimated that if the tariffs at play in the case now headed to the Supreme Court are found to be unlawful, the government would be responsible for coughing up about half of its tariff revenue.
Asked how he arrived at that percentage, Collinson posited that the Treasury Secretary was likely looking at a tariff pie made up of existing Section 301 tariffs, Section 232 tariffs, IEEPA tariffs and specific border taxes on Mexico and Canada when he made that statement. Only IEEPA tariffs and the 25 percent duties on North American trade partners are up for debate in this case.
“If the Supreme Court says, yes, these are illegal, the next thing would be that the decision that was put forward in the Court of Appeals, which was instructing the lower court (the Court of International Trade) to review its decision—that’s when we would see what the scope is, as to what might be ruled illegal or what might be refunded,” Collinson said.
Collinson believes that although the CIT decided that the global IEEPA tariffs were unlawful, the scope of the outcome could change during the review process. “We might see less than the full refund of those tariffs. But it’s not necessarily the case that that’s all the refunds we’re going to see. So we just got to watch and see what the courts do,” she said.
With his trade agenda under scrutiny from the nation’s highest court and trade partners decrying the administration’s protectionist policies, Trump has faced criticism both at home and abroad.
On Monday, leaders from BRICS Alliance nations including Brazil, Russia, India and China gathered virtually for the bloc’s annual summit, with much of the discussions between the world’s sourcing superpowers centered on strengthening trade ties absent the support and cooperation of the U.S. Indian External Affairs Minister S. Jaishankar was adamant that “Increasing barriers and complicating transactions will not help” promote fair and sustainable trade.
“With respect to India, they do have a 25 percent tariff from the IEEPA reciprocal… They were also issued in August a provision to assess an additional 25 percent because they are purchasing Russian oil,” Collinson said. “So in net effect, they have two IEEPAs.”
Trump appears to have heard the message loud and clear. On Tuesday afternoon, the president—who has liberally lambasted India for its trade deficit with the U.S. and its Russia ties—said he was “pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations.”
“I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!” he Truthed.
