The United States Supreme Court is on the verge of issuing a historic ruling. This ruling will finally bring to an end the contentious tariffs imposed by the Trump administration and the toxicity they spread throughout American trade policy. The lawsuit challenges whether former President Donald Trump followed the law when he invoked the International Emergency Economic Powers Act (IEEPA) to take certain actions. He used this very act to retaliate on tariffs on imports. The outcome of this legal battle may have profound implications for small business, state government and the economy as a whole. According to experts, as much as $90 billion in import taxes are up for grabs.
The tariffs, as we know them today, were born out of the Trump era. Specifically, he declared an emergency under the IEEPA, which allowed him to steer around normal procedures. He had immediate power to issue orders. This would result in a fast implementation of punitive tariffs, anywhere between 10% and 50%, on every item from nearly every country. These punitive tariffs have plunged thousands of companies into disarray. Take the case of Learning Resources, a small, U.S. toy retailer that is projected to lose $14 million this year due to increased import costs.
As businesses struggle with the costs of these tariffs, the implications are felt far beyond individual small businesses. Requiring an act of Congress to shift, the administration’s tariff war has made trade obtuse as seen in a complex deal the administration signed in July with the European Union. The U.S. engaged in a tit-for-tat exchange of tariffs throughout the summer. Throughout this period, they were aggressively negotiating free trade agreements with other countries. Many businesses have reported disruptions to operations, with Chocolats Camille Bloch shifting the manufacturing of hundreds of items due to the tariffs’ impact.
More than 200 of their fellow Congressional Democrats, as well as Republican Senator Lisa Murkowski, joined this legal challenge. They filed a brief defending the proposition that the emergency law does not permit Trump to use tariffs as a bargaining chip in trade negotiations. As this coalition emphasized, most of the tariffs that were levied are unlawful and should be overturned. Trump frames the fight in apocalyptic stentorian tones. His argument is that losing this test case would hobble his ability to negotiate trade deals and endanger national security.
It is those same vivid unfolding arguments that the Supreme Court justices will be anxiously if not eagerly listening to. Realistically, they are primed to debate for months before coming to a decision. The result has very high stakes for Trump’s legacy. It’s doing a disservice to the small businesses that are most adversely impacted by these erratic shifts in policy. The prospect of refunding billions already collected through tariffs only adds to the complexity and uncertainty of the entire situation.