Conservative justices sharply question Trump tariffs in high stakes hearing

Supreme Court justices have sharply questioned President Donald Trump's sweeping tariffs in a case with wide implications for his agenda and the global economy.

Chief Justice John Roberts, and Justices Amy Coney Barrett and Neil Gorsuch – three conservatives – sounded sceptical of the government's justification for the import duties.

America's highest court is considering a challenge brought by a number of small businesses and a group of states who argue that most of the tariffs are unlawful because only Congress has the power to impose what is, in effect, a tax.

But some of the conservative justices also indicated sympathy toward arguments by Trump's lawyers that the president has broad authority in foreign affairs, including trade and tariffs.

If it loses, the government might have to refund some of the billions of dollars it has collected through the tariffs, which Barrett said could become a "complete mess".

The Supreme Court - which has a 6-3 conservative majority - usually takes months to reach big decisions, but it could move faster in this case.

Even if the justices did rule against Trump, US Treasury Secretary Scott has said the administration would switch to other legal authorities to keep the tariffs in place.

In a possible sign of case's complexities, Wednesday's hearing stretched almost three hours - far longer than the time formally allotted.

The chief justice said: "The justification is being used for power to impose tariffs on any product from any country in any amount, for any length of time."

If the court ruled for Trump in this case, Gorsuch wondered: "What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce?"

He added that he was "struggling" to find a reason to buy US Solicitor General John Sauer's arguments.

The court's three liberal justices also expressed scepticism about whether federal law – and the US Constitution – give the president authority to unilaterally set tariff levels on foreign imports.

Arguing over 'country-killing' crises

The case centres around a 1977 law, the International Emergency Economic Powers Act (IEEPA), that Trump's lawyers have said gives the president the power to impose tariffs. Although the Constitution specifically vests Congress with tariff authority, Trump has claimed that the legislature delegated "emergency" authority to him to bypass longer, established processes.

Sauer asserted that the nation faced unique crises – ones that were "country-killing and not sustainable" - that necessitated emergency action by the president. He warned that if Trump's tariff powers were ruled illegal, it would expose the US to "ruthless trade retaliation" and lead to "ruinous economic and national security consequences".

Trump first invoked IEEPA in February to tax goods from China, Mexico and Canada, saying drug trafficking from those countries constituted an emergency.

He deployed it again in April, ordering levies from 10% to 50% on goods from almost every country in the world. This time, he said the US trade deficit - where the US imports more than it exports - posed an "extraordinary and unusual threat".

Those tariffs took hold in fits and starts this summer while the US pushed countries to strike "deals".

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Lawyers for the challenging states and private groups have contended that while the IEEPA gave the president power to regulate trade, it made no mention of the word "tariffs".

Neil Katyal, making the case for the private businesses, said it was "implausible" that Congress "handed the president the power to overhaul the entire tariff system and the American economy in the process, allowing him to set and reset tariffs on any and every product from any and every country, at any and all times".

He also challenged whether the issues cited by the White House, especially the trade deficit, represent the kind of emergencies the law envisioned.

Suppose America faced the threat of war from a "very powerful enemy", Samuel Alito, another conservative justice, asked. "Could a president under this provision impose a tariff to stave off war?"

Katyal said that a president could impose an embargo or a quota, but a revenue-raising tariff was a step too far.

For Sauer, this was a false choice. Presidents, he said, have broad powers over national security and foreign policy – powers that the challengers want to infringe on.

Tariffs v taxes

A key question could be whether the court determines whether Trump's tariffs are a tax.

Several justices pointed out that the power to tax – to raise revenue – is explicitly given to Congress in the Constitution.

Sauer's reply was that Trump's tariffs are a means of regulating trade and that any revenue generated is "only incidental".

Of course, Trump himself has boasted about the billions his tariffs have generated so far and how essential this new stream of funding is to the federal government.

The justices spent very little time on questions about refunds or whether the president's emergency declarations were warranted. Instead they spent most of their time examining the text of IEEPA and its history.

Sauer urged them to understand tariffs as a natural extension of other powers granted to the president under the law rather than a tax. "I can't say it enough - it is a regulatory tariff, not a tax," he said.

But that appeared to be a stumbling block for many of the justices.

"You want to say that tariffs are not taxes but that's exactly what they are," Justice Sonia Sotomayor said.

Many seemed persuaded by arguments from the business and states that tariffs, as a tax paid by US businesses, were fundamentally different from the other kinds of powers addressed by the law.

But not all.

Justice Brett Kavanaugh expressed doubts on that point towards the end of the hearing, saying it didn't seem to very "common sense" to give the president the power to block trade entirely, but not impose a 1% tariff, sugggesting it left a gap like a donut hole.

"It's not a donut hole. It's a different kind of pastry," Gutman responded, drawing chuckles in the crowd.

What the court's ruling could do

Treasury Secretary Bessent, who attended the hearing, made no comment when asked by the BBC what he thought. Secretary of Commerce Howard Lutnick, also in court, flashed a thumbs-up.

The hearing drew a full audience, with media pushed into overflow seats behind columns.

If a majority of the Supreme Court rules in Trump's favour, it will overturn the findings of three lower courts that already ruled against the administration.

The decision, no matter how it works out, has implications for an estimated $90bn worth of import taxes already paid - roughly half the tariff revenue the US collected this year through September, according to Wells Fargo analysts.

Trump officials have warned that sum could swell to $1tn if the court takes until June to rule.

If the government had to reimburse such revenue, Katyal said small businesses might get refunds, but bigger companies would have to follow "administrative procedures". He admitted it was a "very complicated thing".

In remarks on Wednesday, press secretary Karoline Leavett hinted that the administration already was looking at other ways to impose tariffs if the Supreme Court ruled against them.

"The White House is always preparing for Plan B," she said.