President Trump has made tariffs the utility knife of his second-term agenda. They have helped him raise revenue, shape trade negotiations and bend other nations to his political will.
But as Mr. Trump learned on Wednesday, the most important tool in his punitive and ever-expanding trade war may soon be reaching its limits.
The fate of the president's sweeping taxes on imports from nearly every country now rests in the hands of the nine Supreme Court justices, most of whom were skeptical of Trump's novel and sweeping assertions of trade powers.
There's no telling how a divided chamber will ultimately rule in this landmark case, which could redefine the scope of the president's trade powers and limit Mr. Trump's ability to impose tariffs on a whim. But the court's questioning – which spanned nearly three hours of oral arguments – underscored the president's broad political interests and his economic vision.
Since his election victory a year ago, Mr. Trump has targeted friends and rivals such as Canada, Mexico, the European Union and China with a series of escalating duties. These import taxes were collected primarily from American consumers and businesses.
Mr. Trump imposed the tariffs without congressional approval, citing a decades-old emergency law that imposes a 10 percent tax on almost every trading partner and higher levies on dozens of countries.
Both the tariffs and the tactics used to impose them are equally important to Mr. Trump, who relishes the ability to adjust tariffs with the stroke of a pen. He has used this emergency power to reduce national debt, support domestic manufacturing and pressure other countries into favorable deals, while at the same time trying to achieve a variety of other goals, many of which have nothing to do with trade.
At an event in Florida shortly after the justices wrapped up the case, Trump again boasted on Wednesday about the tax benefits of his tariffs, boasting that they would bring in “hundreds of billions” in revenue. So far this year, the United States has collected more than $200 billion in tariffs, more than double the amount in 2024, federal records show.
The president said he would use that money on a number of priorities, including offsetting the roughly $4 trillion tax cut package he signed into law earlier this year. But a loss at the Supreme Court could force the government to refund some or all of the money, a prospect that Mr. Trump and his top advisers have described as an economic disaster.
And yet Mr Trump and his surrogates sought to rule out the possibility of defeat on Wednesday, even as the fate of their second-term agenda hung in the balance.
“It went very well,” Treasury Secretary Scott Bessent told reporters later at the White House. Asked whether the government had a replacement plan, he said he would not talk about it.
“It gives him the ultimate negotiating power,” Bessent said of the president’s tariff powers.
Mr. Trump's strategy is based on the International Emergency Economic Powers Act, a law Congress passed in 1977 largely to limit the president's power over trade. No president before Mr. Trump had used the law to impose tariffs, a word that does not appear in the statute.
With the law, Mr. Trump was able to impose high tax rates on every U.S. trading partner without the need for a lengthy investigation or battle in Congress. He called these tariffs “reciprocal” and said they were a response to a national emergency, namely the ongoing trade deficits between the United States and other countries.
But Mr. Trump has also applied those tariffs to countries with which the United States runs a trade surplus, including Australia. He has imposed other tariffs for punitive reasons or to achieve goals that go beyond the scope of trade.
Mr. Trump announced a 50 percent tax on imports from Brazil this year, in part because of the country's treatment of political ally Jair Bolsonaro, who has faced charges of inciting a coup. Mr. Trump has also presented his high tax rates for Mexico and Canada in part as a response to illegal drug trafficking across the border.
Two groups of states and small businesses challenged the legality and sweeping scope of Mr. Trump's tariffs starting this spring in two lawsuits filed jointly with the Supreme Court on Wednesday. Even the court's conservative justices questioned whether Congress had intended to give the president such sweeping tariff powers that the Constitution grants to legislatures.
“I think the justices all understand that the way they resolve this case will not only have a massive impact on economic policy, but will actually be a harbinger for the court's relationship with the administration more broadly,” said Stephen I. Vladeck, a professor at Georgetown University Law Center.
In a speech on Wednesday about his economic agenda, Mr. Trump spoke candidly about how the unbridled power of tariffs had supported his agenda. He said it had allowed him to strike trade deals, including with countries like Japan, and negotiate solutions to some foreign conflicts.
“Without tariffs, this would never have happened,” he said.
Even if the Supreme Court invalidates Mr. Trump's ability to use emergency authority to impose tariffs, he would still be able to impose taxes on imports. The president has already used a national security law to impose tariffs on specific items and industries, from lumber and steel to end products like heavy-duty trucks and bathroom vanities.
However, these powers may be limited and may require lengthy investigations before tariffs can be finalized. None of these rules is as flexible as the emergency law.
Nick Iacovella, the executive vice president of the Coalition for a Prosperous America, a group that supports Mr. Trump's tariffs, described the emergency legislation as “absolutely essential to the Trump administration's agenda.”
But he added: “Even if they lost the SCOTUS case, they could still have almost the same policy baseline as we have now.”
The Trump administration remains optimistic about its prospects. Mr. Bessent, appearing on the Fox Business Network a few hours after the hearing, said he was “very optimistic” that the court would rule in the president's favor. He added that the plaintiffs had “embarrassed themselves” because they did not understand economic and trade policy.
But if Mr. Trump prevails at the Supreme Court, it could “embolden the administration,” said Ted Murphy, co-head of the commercial practice at law firm Sidley Austin. It would strengthen the president's ability to use a law with “very few or no guardrails” to impose tariffs in response to anything Mr. Trump deems a national emergency.
That prospect has unsettled Democrats, who have led a push on Capitol Hill to try to roll back some of the president's duties. In the Senate last week, they secured a handful of Republican votes to block Brazil taxes, although the measure faces formidable opposition in the House.
“We have begun to recognize the reluctance of Congress to commit to these blanket tariffs,” said Sen. Amy Klobuchar, Democrat of Minnesota, who attended oral arguments.
Ryan Majerus, a former Biden administration official who is now a partner at King & Spalding, said a presidential victory could allow Mr. Trump to tax a broader range of imports and other forms of trade, including potentially the flow of investment into the United States.
“Depending on what the court decides, there could be a lot of knock-on effects in either direction,” he said.