By: Ryan DePirri
The Supreme Court will soon decide whether a president can use the International Emergency Economic Powers Act (IEEPA) to impose tariffs.[1] Congress enacted IEEPA in 1977 to allow presidents to act quickly in a true national security or foreign policy crisis.[2] In the past, presidents have mostly used it to freeze assets or block transactions tied to hostile governments or terrorist groups.[3] President Trump took it in a new direction when he used IEEPA to put broad “reciprocal” tariffs on major trading partners, asserting that the move would protect U.S. industries and push other countries to the table.[4]
Tariffs are traditionally a congressional power under Article I of the Constitution, and nothing in IEEPA specifically mentions tariffs or duties.[5] In May 2025, the U.S. Court of International Trade ruled that the tariffs exceeded the authority Congress delegated in the statute.[6] The Federal Circuit affirmed on August 29, 2025, though it paused the effect of its decision until October 14, 2025, to give the government time to appeal.[7] Within days, the administration petitioned the Supreme Court, warning that striking down the tariffs would weaken U.S. leverage in trade disputes and constrain presidential responses in future emergencies.[8]
Even while the courts sort this out, the tariffs remain in place, and businesses are feeling the impact. Importers are paying more for goods and materials, and many companies are scrambling to adjust supply chains to handle unexpected costs.[9] Business groups have warned that broad tariffs raise costs for companies and consumers and make long-term supply chain planning more difficult.[10] Investors are taking notice, too.[11] In early September, U.S. stock indexes, including the S&P 500, fell as traders reacted to uncertainty and the risk that higher import costs could keep inflation elevated.[12]
What the Supreme Court does next will have significant implications.[13] If the Court upholds Trump’s use of IEEPA, it would essentially allow future presidents to impose tariffs on their own whenever they claim an “emergency.”[14] That would make trade rules less predictable and force lawyers and businesses to reconsider contracts, sourcing, and risk management.[15] Companies that rely on global supply chains would need to plan for sudden cost spikes and policy changes that could arrive with a single executive order.[16]
If the Court rules the other way, it would reaffirm Congress’s role as the primary authority in setting tariff policy and give businesses more certainty about how trade rules are made.[17] That kind of clarity would help companies make long-term decisions and negotiate deals without worrying that the ground might shift overnight.[18] For lawyers who advise companies on trade and manufacturing, it would also send a strong message that any major tariff policy must proceed through the legislative process.[19]
Either way, the case demonstrates how a constitutional fight over separation of powers can have an immediate effect on the economy and on everyday business decisions.[20] Whether the outcome of the case leads to a stronger presidency in trade matters or confirms Congress’s control, it will shape how companies think about global markets, how they write contracts, and how they plan for the next big shift in U.S. trade policy.[21]
[1] Amy Howe, Supreme Court Announces It Will Hear Challenges to Trump’s Tariffs on Nov. 5, SCOTUSblog (Sep. 18, 2025, 12:27 PM), https://www.scotusblog.com/2025/09/supreme-court-announces-it-will-hear-challenges-to-trumps-tariffs-on-nov-5/ [https://perma.cc/JQ6R-VPY2] (reporting that the Supreme Court added the IEEPA-tariff case to its November 5th docket).
[2] 50 U.S.C. §§ 1701–1706 (1977).
[3] Complaint at 11, FIREDISC, Inc. v. Trump, No. 1:25-cv-1134 (W.D. Tex. July 21, 2025) (“[P]residents have cited IEEPA to impose economic sanctions such as import bans and asset freezes.”).
[4] Lauren Mandell et al., President Trump Announces Significant Reciprocal Tariffs and Elimination of De Minimis Exemption, WilmerHale (Apr. 3, 2025), https://www.wilmerhale.com/en/insights/client-alerts/20250403-president-trump-announces-significant-reciprocal-tariffs-and-elimination-of-de-minimis-exemption [https://perma.cc/MR89-EHJT].
[5] William A. Galston, Are President Trump’s Tariffs Legal?, Brookings (Sept. 12, 2025), https://www.brookings.edu/articles/are-president-trumps-tariffs-legal/ [https://perma.cc/HUS4-A5NM] (noting specifically that Article 1, Section 8 of the Constitution allows Congress to impose tariffs).
[6] Id.
[7] Ashley Akers et al., Court of Appeals Strikes Down IEEPA Tariffs, Setting Stage for Supreme Court Ruling, Holland & Knight (Sept. 9, 2025), https://www.hklaw.com/en/insights/publications/2025/09/court-of-appeals-strikes-down-ieepa-tariffs-setting-stage [https://perma.cc/V2CM-EHSU].
[8] Id.
[9] Michael Negron, 8 Ways Trump’s Turbulence Tax Is Costing the Economy, Ctr. for Am. Progress (Sept. 3, 2025), https://www.americanprogress.org/article/8-ways-trumps-turbulence-tax-is-costing-the-economy/.
[10] Philip Luck, What the Court’s Ruling on Trump’s Tariffs Means for U.S. Trade Policy and the Economy, Ctr. for Strategic & Int’l Stud. (May 29, 2025), https://www.csis.org/analysis/what-courts-ruling-trumps-tariffs-means-us-trade-policy-and-economy [on file with the American University Business Law Review].
[11] Caroline Valetkevitch, Wall Street Ends Lower as Ruling on Trump Tariffs Raises Concerns, Reuters, Sept. 2, 2025, https://www.reuters.com/business/wall-street-ends-lower-ruling-trump-tariffs-raises-concerns-2025-09-02/ [https://perma.cc/3WLY-4GHS] (describing investor fears that unresolved tariff legality could prolong supply-chain disruptions and keep inflation elevated).
[12] Id.
[13] Andrew Chung, U.S. Supreme Court to Decide Legality of Trump’s Tariffs, Reuters, Sept. 10, 2025, https://www.reuters.com/legal/government/us-supreme-court-decide-legality-trumps-tariffs-2025-09-09/ [https://perma.cc/29AG-QFHF].
[14] Id.
[15] See Luck, supra note 10.
[16] Id.
[17] Damon Pike et al., Federal Circuit Court of Appeals Invalidates IEEPA Tariffs, BDO USA (Sept. 3, 2025), https://www.bdo.com/insights/tax/federal-circuit-court-of-appeals-invalidates-ieepa-tariffs [https://perma.cc/ZV7L-G6K4].
[18] See Devin Watkins, Tariffs Are Taxes and Must Be Legislatively Accountable, Competitive Enter. Inst. (Sept. 4, 2025), https://www.cei.org/blog/tariffs-are-taxes-and-must-be-legislatively-accountable [https://perma.cc/G762-K54E].
[19] Luck, supra note 10.
[20] Chung, supra note 13.
[21] Luck, supra note 10.
