Donald Trump’s tariffs did not just spark another trade war in 2025, they also began an internal legal war that is now sitting at the heart of the US Supreme Court.
With a few signatures, he turned a 1977 emergency law meant for national security crises into a weapon that threatens global trade.
Besides sparking tension against other nations and causing market chaos, it has also led to an unprecedented legal case.
It’s a fight that mixes law, money and ego in equal measure. Billions of dollars are tied up in tariffs that may soon vanish. And underneath everything is yet again the question of how much power should one person have over the economy.
The law that was never meant for tariffs
The International Emergency Economic Powers Act, or IEEPA, was written in 1977 to help presidents freeze assets or block transactions in cases of national emergency such as war, terrorism, or foreign aggression. It was never about trade balances or manufacturing jobs.
Trump used it anyway. In April 2025, he declared ‘Liberation Day’ and announced a 10% baseline tariff on nearly all imports. Countries that didn’t make trade deals fast enough faced “reciprocal” rates as high as 41%.
He even tied new levies on Mexico, Canada and China to the fentanyl crisis, claiming it was a national emergency.
No president had ever used IEEPA this way. But Trump liked it precisely because it let him act alone. No hearings, no studies, no public input. Just a declaration and a press conference.
And lower courts rejected that logic. The Court of International Trade and the Federal Circuit both ruled that tariffs belong to Congress and that IEEPA does not delegate such sweeping power to the president.
They described the use of the law as “impermissible not because it is unwise or ineffective, but because it is not allowed.”
The Supreme Court agreed to hear the appeal and held oral arguments on November 5.
What happened in the courtroom
Inside the chamber, the administration’s lawyer, Solicitor General John Sauer, faced a skeptical bench.
Justices across the ideological spectrum pressed him to explain where Congress had granted a president the right to tax Americans through emergency powers.
“The Constitution is structured so that if I’m going to be asked to pay for something, it’s through a bill that begins in Congress,” Justice Sonia Sotomayor said.
Chief Justice John Roberts and Justice Neil Gorsuch, both conservatives, expressed similar doubts.
They questioned whether the word “transactions” in IEEPA could be stretched to include every imported good entering US ports.
Only Justice Samuel Alito appeared fully open to Trump’s position, though even he raised concerns about how broadly the administration had read the law.
Observers in the courtroom described a tone of disbelief rather than division.
Prediction markets reacted in real time. On Polymarket, traders cut Trump’s odds of winning from 40% to 20% during the hearing before settling around 32%. Kalshi reported the same.
The markets are clearly pricing in the justices’ skepticism.
What happens if Trump’s tariffs fall
If the Court upholds the lower rulings, the administration could be forced to unwind most IEEPA-based tariffs and repay tens of billions collected from importers.
The Congressional Budget Office has not published an exact figure yet, but analysts estimate around $90 billion has been raised under these duties since 2025.
Refunding that money would strain federal finances already under pressure. The White House had been counting tariff revenue as a partial offset for the tax cuts signed into law on July 4.
Any fiscal hit could add to worries about US debt levels and higher borrowing costs, which will hit the bond markets first.
Industries that have built supply chains around the tariff regime would also face disruption.
For importers, an end to the IEEPA duties would reduce costs but reopen pricing uncertainty as the administration turns to slower and more targeted trade tools.
For exporters abroad, especially in China and Mexico, it would ease one layer of US protectionism but leave others intact.
However, even without IEEPA, Trump retains several trade statutes that give him tariff power, though none offer the same speed or breadth.
Trade lawyers note that each of these paths demand investigations, reports and consultations. That was the attraction of IEEPA however, as it required none.
When is the outcome and what to expect
Normally, Supreme Court decisions take 3–6 months post-argument. But this one is fast-tracked, so a ruling is expected by year’s end.
Refunds are possible, but far from guaranteed. The actual amount and timing depend strongly on how the Supreme Court frames the decision and how the executive and CBP respond.
If the administration resists or delays, many importers might see little or only partial repayment, while those with best documentation, early claims and capacity to litigate are best positioned to recover.
Beyond tariffs, this is a referendum on how far the executive can go without Congress. The outcome sets precedent for future emergencies.
Trump’s gamble was to treat enduring trade imbalances, and what he calls unfair practices, as “emergencies”.
But that’s a stretch, as most emergencies are acute like war, natural disaster, financial crash, and not chronic structural issues like trade deficits.
A ruling against Trump would close the door on using emergency powers as a shortcut for long-term trade policy.
It would push future presidents back toward slower, rules-based channels that depend on formal findings and agency work.
A decision in Trump’s favor would expand presidential authority dramatically, allowing future presidents of either party to raise import taxes at will under broad emergency declarations.
Most analysts reading the hearing expect the Court to limit that power. Even conservative justices appeared wary of allowing one person to levy what amounts to a nationwide tax.
The likely outcome is a ruling that preserves emergency powers for true crises such as wars, sanctions, cyberattacks, but not for economic policy experiments.
The post All you need to know about Trump’s tariffs and his battle against the Supreme Court appeared first on Invezz