Supreme Court justices grill lawyer for Trump on legality of tariffs

By Andrew Chung, John Kruzel and Jan Wolfe

WASHINGTON (Reuters) -The lawyer representing Donald Trump's administration faced tough questions from conservative and liberal U.S. Supreme Court justices on Wednesday over the legality of the Republican president's sweeping tariffs in a case with implications for the global economy that marks a major test of Trump's powers.

The justices pressed U.S. Solicitor General D. John Sauer, arguing for the administration, about whether Trump had intruded on the power of Congress in imposing tariffs under a 1977 law meant for national emergencies.

They also asked Sauer whether Trump's application of this statute to impose tariffs of unlimited duration was a major action by the executive branch that would require clear congressional authorization. Those questions related to the Supreme Court's "major questions" doctrine, which requires executive branch actions of vast economic and political significance to be clearly authorized by U.S. lawmakers.

The arguments come in appeals pursued by the administration after lower courts ruled that his unprecedented use of a 1977 federal law at issue to impose the tariffs exceeded his authority. Businesses affected by the tariffs and 12 U.S. states, most of them Democratic-led, challenged the tariffs.

The tariffs - taxes on imported goods - could add up to trillions of dollars for the United States over the next decade.

Trump has heaped pressure on the Supreme Court, which has a 6-3 conservative majority, to preserve tariffs that he has leveraged as a key economic and foreign policy tool.

Some of the conservative justices also asked pointed questions to Neal Katyal, a lawyer arguing for businesses that challenged the tariffs.

Sauer kicked off the arguments by defending the legal rationale employed by the president but immediately faced questions raising skepticism over the administration's arguments about the language and purpose of the statute at issue.

Trump invoked the International Emergency Economic Powers Act, or IEEPA, to impose the tariffs on nearly every U.S. trading partner. The law allows a president to regulate commerce in a national emergency.

'RUTHLESS TRADE RETALIATION'

Sauer said Trump determined that U.S. trade deficits have brought the nation to the brink of an economic and national security catastrophe. Sauer said imposition of the tariffs has helped Trump negotiate trade deals, and unwinding those agreements "would expose us to ruthless trade retaliation by far more aggressive countries and drive America from strength to failure with ruinous economic and national security consequences."

The U.S. Constitution grants Congress, not the president, the authority to issue taxes and tariffs. The administration has argued that IEEPA allows tariffs by authorizing the president to "regulate" imports to address emergencies.

The imposition of taxes on Americans "has always been the core power of Congress," conservative Chief Justice John Roberts told Sauer, adding that these tariffs seem to be raising revenue, which the Constitution contemplates as a role for Congress.

Conservative Justice Amy Coney Barrett questioned Sauer about his argument that IEEPA's language granting presidents emergency power to "regulate importation" encompasses tariffs.

"Can you point to any other place in the code or any other time in history where that phrase together 'regulate importation' has been used to confer tariff imposing authority?" Barrett asked.

Trump is the first president to use IEEPA to impose tariffs, one of the many ways he has aggressively pushed the boundaries of executive authority since he returned to office in areas as varied as his crackdown on immigration, the firing of federal agency officials and domestic military deployments.

U.S. Treasury Secretary Scott Bessent said in the lead-up to the arguments that if the Supreme Court rules against Trump's use of IEEPA, his tariffs are expected to remain in place because the administration would switch to other legal authorities to underpin them.

In fact, conservative Justice Samuel Alito asked about a different statute that has gotten less attention, known as Section 338 of the Tariff Act of 1930, could provide an alternate basis for Trump's tariffs. Trump has imposed some additional tariffs invoking other laws. Those are not at issue in this case.

Trump instigated a global trade war when he returned to the presidency in January, alienating trading partners, increasing volatility in financial markets and fueling global economic uncertainty.

MAJOR QUESTIONS DOCTRINE

The Supreme Court applied the "major questions" doctrine to strike down key policies of Trump's Democratic predecessor Joe Biden.

Sauer said the president's actions in imposing the tariffs did not violate the Supreme Court's "major questions" doctrine, which requires executive branch actions of vast economic and political significance to be clearly authorized by Congress. The Supreme Court applied this doctrine to strike down key policies of Trump's Democratic predecessor Joe Biden.

A lower court in ruling against Trump found that the tariffs were impermissible under this doctrine.

Some of the justices, in questioning Sauer on whether Trump's tariffs would survive scrutiny under the "major questions doctrine," noted that Congress did not include the word tariffs in IEEPA.

Roberts challenged Sauer to explain why the court's major questions doctrine would not apply to Trump's tariffs under IEEPA.

"The justification is being used for a power to impose tariffs on any product, from any country, in any amount, for any length of time. I'm not suggesting it's not there, but it does seem like that's major authority, and the basis for that claim seems to be a misfit. So why doesn't it apply?" Roberts asked.

Sauer said the doctrine does not apply in the foreign affairs context, but Roberts then raised doubts that the president's power in this domain could override inherent powers of Congress.

"The vehicle is the imposition of taxes on Americans, and that has always been the core power of Congress," Roberts told Sauer.

The Supreme Court has long shown deference to the president on conducting foreign policy. Roberts, while questioning Katyal, seized upon this point.

Roberts asked Katyal, "Sure, the tariffs are a tax, and that's a core power of Congress, but they are a foreign-facing tax, right? And foreign affairs is a core power of the executive."

Roberts noted that Trump's tariffs have undoubtedly given him leverage in making foreign trade agreements. Katyal responded that a president's emergency powers are not limitless, and that the public needs to know what these limits are.

The Supreme Court has backed Trump in a series of decisions issued this year on an emergency basis. While the Supreme Court typically takes months to issue rulings after hearing arguments, the Trump administration has asked it to act swiftly in this case.

THE POWERS OF THE PRESIDENCY

Liberal Justice Elena Kagan pressed Sauer about his claim that Trump's tariffs are supported by the president's inherent powers under the Constitution. Kagan said the power to impose taxes and regulate foreign commerce are usually thought of as "quintessential" powers belonging to Congress, not the president.

Liberal Justice Ketanji Brown Jackson said IEEPA was intended to limit presidential authority, not expand it.

"It's pretty clear that Congress was trying to constrain the emergency powers of the president," Jackson said.

Conservative Justice Brett Kavanaugh signaled potential sympathy for Trump, noting that former President Richard Nixon imposed a worldwide tariff under IEEPA's predecessor statute in the 1970s that contained language similar to "regulate importation."

"That's a good example for you," Kavanaugh told Sauer.

'SIMPLY IMPLAUSIBLE'

Katyal told the justices that commonsense makes clear that the administration's interpretation of IEEPA is flawed.

"It is simply implausible that in enacting IEEPA, Congress handed the president the power to overhaul the entire tariff system and the American economy in the process," Katyal said.

Questions posed by conservative Justice Neil Gorsuch suggested that he thinks Sauer's claims about the breadth of the president's inherent foreign affairs powers would threaten to undermine the Constitution's separation of powers between the federal government's executive and legislative branches.

"What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce - or for that matter, declare war - to the president?" Gorsuch asked.

Gorsuch said that as a practical matter Congress cannot get authority over tariffs back if IEEPA is interpreted as handing that power over to the president. This interpretation would be a "one-way ratchet toward the gradual but continual accretion of power in the executive branch and away from the people's elected representatives," Gorsuch said.

The IEEPA-based tariffs have generated $89 billion in estimated collections between February 4 and September 23, when the most recent data was released by the U.S. Customs and Border Protection agency.

Trump invoked IEEPA in slapping tariffs on goods imported from individual countries to address what he called a national emergency related to U.S. trade deficits, as well as in February as economic leverage on China, Canada and Mexico to curb the trafficking of the often-abused painkiller fentanyl and illicit drugs into the United States.

Trump has wielded tariffs to extract concessions and renegotiate trade deals, and as a cudgel to punish countries that draw his ire on non-trade political matters.

IEEPA gives the president power to deal with "an unusual and extraordinary threat" amid a national emergency. It historically had been used for imposing sanctions on enemies or freezing their assets, not to impose tariffs. In passing IEEPA, Congress placed additional limits on the president's authority compared to a predecessor law.

(Reporting by Andrew Chung, John Kruzel and Jan Wolfe in Washington; Additional reporting by David Lawder; Editing by Will Dunham)