(NewsNation) — The U.S. Supreme Court heard oral arguments Wednesday on whether President Donald Trump overstepped federal law when he imposed sweeping import tariffs on numerous U.S. trading partners.
Since taking office in January, Trump has imposed tariffs on dozens of countries, including Canada, Mexico, Brazil and China. Lower courts have ruled the tariffs are an illegal use of the International Emergency Economic Powers Act or IEEPA. If the Supreme Court agrees, it would be a significant blow to the president’s economic agenda.
Solicitor General D. John Sauer, who is representing the Trump administration, argued the tariffs are regulatory and not a tax.
“We don’t contend that what’s being exercised here is the power to tax, it’s the power to regulate foreign commerce,” Sauer said. “These are regulatory tariffs, they are not revenue raising tariffs. The fact that they raise revenue is only incidental.”
Justices Sonia Sotomayor questioned Sauer on this point and pushed against his claim the tariffs aren’t a tax.
“It’s a congressional power, not a presidential power, to tax,” Sotomayor said. “but that’s exactly what they are. They’re generating money from American citizens, revenue.”
Meanwhile, Justice Elena Kagan questioned Sauer on the Trump administration’s claim presidential emergency powers were justified.
“We’ve had cases recently which deals with the president’s emergency powers, and it turns out we’re in emergencies everything all the time about like half the world,” Kagan said.
“Well, this particular emergency is particularly existential,” Sauer said.
Justice Brett Kavanaugh asked Sauer why former presidents Clinton, Bush and Obama did not use IEEPA to impose tariffs, given that there had also been trade disputes during their time in office. Sauer said looking at past emergencies, it is “really hard to find one” where tariffs would have been the “natural tool” to address that emergency.
The lawyer challenging on the Trump administration in this case is Neal Katyal. Katyal is a former Supreme Court clerk and previously served as acting solicitor general during the Obama administration. He argues that “IEEPA is a sanction statute, not a tax statute,” and that tariffs are taking money out of the pockets of Americans.
“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. “Allowing him to set and reset tariffs on any and every product, from any and every country, at any and all times.”
Justice Clarence Thomas questioned Katyal on whether his argument would apply to embargos and quotas. Katyal said no.
“Embargoes stop the shipment, tariffs start the tax bill.” Katyal said. “Tariffs are constitutionally special, because our co-founders feared revenue raising unlike embargoes. There was no ‘Boston Embargo Party,’ but there certainly was a Boston Tea Party.
The White House has said it is “100% confident” in the arguments of the president’s legal team and that the “importance of this case cannot be overstated.”
“He’s been able to bring in trillions of dollars of investments into our country,” White House press secretary Karoline Leavitt said. “And the president strongly believes that economic security is a matter of national security, and tariffs have a lot to do with that.”
According to Kalshi, a federally regulated prediction market, the odds of Supreme Court ruling in favor of Trump’s tariffs stood at 30% after the hearing ended.
Trump was not at the Supreme Court for Wednesday’s arguments, despite expressing a desire to attend. Instead, the White House said Treasury Secretary Scott Bessent was present. Trump was in Miami, where he is scheduled to address top business and sports leaders at a two-day summit and is expected to discuss the economy.