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Key takeaways:
US President Donald Trump’s authority to implement tariffs on imports under a law designed for use during a national emergency was met with skepticism by Supreme Court justices. They heard oral arguments on Wednesday, November 5. On April 2, what Trump had called “Liberation Day,” the president invoked his authority under the International Emergency Economic Powers Act (IEEPA) of 1977 to levy tariffs on almost every country in the world. These tariffs took effect April 5.
The president imposed the tariffs to “address the national emergency posed by the large and persistent trade deficit… driven by the absence of reciprocity in our trade relationships and… currency manipulation and exorbitant value-added taxes perpetuated by other countries,” according to a White House fact sheet.
The Supreme Court, which has a 6-3 conservative majority, heard oral arguments that spanned over two and a half hours on Wednesday. They considered the legality of tariffs the president has invoked under the IEEPA.
Lower courts have ruled that Trump exceeded his authority under both the statute and the Constitution.
According to the Constitution, the power to set tariffs is assigned to the Congress. While IEEPA does not specifically mention tariffs, it says the president can “regulate” imports and exports. This can occur when he deems there to be an emergency — an “unusual and extraordinary threat” to the nation.
Solicitor General D. John Sauer, on behalf of the Trump administration, argued that the IEEPA law does allow the president to “regulate” imports. This naturally includes the use of tariffs, particularly in combination with the president’s inherent powers to conduct foreign policy.
Chief Justice John Roberts suggested that the language in the law may not be clear enough to justify the import duties. Moreover, Justice Amy Coney Barrett also asked Sauer whether the court had ever viewed the term “regulate” to include sweeping tariffs.
While justices pressed the Trump administration, a majority expressed reservations about the reliance on declared emergencies to issue the unchecked tariffs.
It could take weeks or even months before a decision in the case is made, according to reports.
The impact of the case could ripple through the global economy for years to come. It also provides a litmus test for Trump’s presidential powers.
While the IEEPA tariffs, also known as the reciprocal tariffs, are separate from Trump’s 50% tariffs on steel. The future of the IEEPA tariffs could affect steelmakers’ operations. This will also impact the trajectory of clean manufacturing, sources told Fastmarkets.
“The reciprocal tariffs impact us in other ways. It’s not so much that it’s on steel, but it’s on things that steelmakers use,” Phil Bell, president of the Steel Manufacturers Association told Fastmarkets in an interview on October 24.
Bell explained: “For example, the purchasing of equipment for all of these new mills that are under way. Or perhaps mills who were not able to get equipment in before the tariffs went into effect.”
“The case is being heard at a time when Trump’s punitive and unpredictable tariffs are… punishing the country’s allies and harming American clean manufacturing competitiveness,” Harry Manin, industrial transformation campaign lead of non-profit organization Sierra Club, said on Wednesday.
“Regardless of SCOTUS’ decision on Trump’s tariffs, there is a better, more strategic approach to trade. Congress has a key role to play and should oppose impulsive tariffs that harm the American economy,” Manin added.
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