U.S. President Donald Trump holds an executive order in the Oval Office on Feb. 13. The President has imposed sweeping tariffs on goods entering the U.S. under the International Emergency Economic Powers Act.Kevin Lamarque/Reuters
Donald Trump’s sweeping imposition of tariffs is not intended to raise revenue, his administration argued before the U.S. Supreme Court Wednesday.
The President has promised to raise trillions of dollars for the United States, and repeatedly pledged an “External Revenue Service” to collect money raised by tariffs as a way to offset domestic taxes.
But the sweeping border levies he has imposed under the International Emergency Economic Powers Act – including the fentanyl tariffs on Canada, and the global “Liberation Day” measures announced in April – are simply tools to achieve an objective that is unrelated to the collection of cash, U.S. Solicitor-General John Sauer argued before the Supreme Court Wednesday.
“These are regulatory tariffs. They are not revenue-raising tariffs,” he said.
“The fact that they raise revenue is only incidental. The tariffs would be most effective, so to speak, if no person ever paid them.”
Bessent signals White House still considering tariff hike, adding to trade uncertainty
The oral arguments before the Supreme Court mark the final legal test of tariffs that lower courts have found to be an overreach of presidential powers. At stake is Mr. Trump’s ability to use a favoured tool, the rapid imposition of tariffs under IEEPA to punish countries who refuse to do his bidding and companies that manufacture goods outside of the U.S.
The legal questions at the heart of the case directly confront the powers that a U.S. president can wield, in a country whose Constitution places taxation in the hands of Congress, but whose legislative history has involved delegating some of that authority to the president – particularly in emergency situations.
“Tariffs are taxes. They take dollars from Americans’ pockets and deposit them in the U.S. Treasury. Our founders gave that taxing power to Congress alone. Yet here, the President bypassed Congress and imposed one of the largest tax increases in our lifetimes,” argued Neal Katyal, a lawyer representing a handful of small businesses that have sought to overturn the tariffs.
Lawyer Neal Katyal, standing outside the U.S. Supreme Court on Nov. 5, represents a group of small businesses that have sought to overturn the Trump administration’s tariffs.Nathan Howard/Reuters
If they succeed, the U.S. government could be forced to refund importers an enormous sum of the tariffs they have already paid – US$140-billion, according to the calculations of investment bank Piper Sandler.
Mr. Trump, who has called tariffs “the most beautiful word,” wrote this week on social media that his ability to impose them is a matter of “literally, LIFE OR DEATH for our Country.”
“With a Victory, we have tremendous, but fair, Financial and National Security,” he wrote. “Without it, we are virtually defenseless against other Countries who have, for years, taken advantage of us.”
Since Mr. Trump’s return to office, U.S. stock markets have defied concerns that tariffs would do broad damage to the country’s economy, while inflation rates have remained modest.