By Andrew Chung
(Reuters) -The U.S. Supreme Court agreed on Tuesday to decide the legality of Donald Trump’s sweeping global tariffs, setting up a major test of one of the Republican president’s boldest assertions of executive power that has been central to his economic and trade agenda.
The justices took up the Justice Department’s appeal of a lower court’s ruling that Trump overstepped his authority in imposing most of his tariffs under a federal law meant for emergencies. The court swiftly acted after the administration last week asked it to review the case, which implicates trillions of dollars in customs duties over the next decade.
The court, which begins its next nine-month term on October 6, placed the case on a fast track, scheduling oral arguments for the first week of November.
The justices also agreed to hear a separate challenge to Trump’s tariffs brought by a family-owned toy company, Learning Resources.
The U.S. Court of Appeals for the Federal Circuit in Washington ruled on August 29 that Trump overreached in invoking a 1977 law known as the International Emergency Economic Powers Act, or IEEPA, to impose the tariffs, undercutting a major priority for the president in his second term. The tariffs, however, remain in effect during the appeal to the Supreme Court.
The levies are part of a trade war instigated by Trump since he returned to the presidency in January that has alienated trading partners, increased volatility in financial markets and fueled global economic uncertainty.
Trump has made tariffs a key foreign policy tool, using them to renegotiate trade deals, extract concessions and exert political pressure on other countries.
Trump in April invoked the 1977 law in imposing tariffs on goods imported from individual countries to address trade deficits, as well as separate tariffs announced in February as economic leverage on China, Canada and Mexico to curb the trafficking of fentanyl and illicit drugs into the U.S.
The law gives the president power to deal with “an unusual and extraordinary threat” amid a national emergency. It historically had been used for imposing sanctions on enemies or freezing their assets. Prior to Trump, the law had never been used to impose tariffs.
Trump’s Department of Justice has argued that the law allows tariffs under emergency provisions that authorize a president to “regulate” imports.
“The stakes in this case could not be higher,” the Justice Department said in a filing.
Denying Trump’s tariff power “would expose our nation to trade retaliation without effective defenses and thrust America back to the brink of economic catastrophe,” it added.
Trump has said that if he loses the case the U.S. might have to unwind trade deals, causing the country to “suffer so greatly.”
The nonpartisan Congressional Budget Office reported in August that the increased duties on imports from foreign countries could reduce the U.S. national deficit by $4 trillion over the next decade.
The appeals court ruling stems from two challenges. One was brought by five small businesses that import goods, including a New York wine and spirits importer and a Pennsylvania-based sport fishing retailer. The other was filed by 12 U.S. states – Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York, Oregon and Vermont – most of them governed by Democrats.
The U.S. Constitution grants Congress, not the president, the authority to issue taxes and tariffs, and any delegation of that authority must be both explicit and limited, according to the lawsuits.
The Federal Circuit agreed. “It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the president unlimited authority to impose tariffs,” it said in a 7-4 decision.
The appeals court also said that the administration’s expansive view of this law violates the Supreme Court’s “major questions” doctrine, which requires executive branch actions of vast economic and political significance to be clearly authorized by Congress.
The New York-based U.S. Court of International Trade, which has jurisdiction over customs and trade disputes, previously ruled against Trump’s tariff policies on May 28.
Another court in Washington ruled that the law does not authorize Trump’s tariffs, and the administration has appealed that decision as well. At least eight lawsuits have challenged Trump’s tariff policies, including one filed by the state of California.
(Reporting by Andrew Chung in New York; Editing by Will Dunham)
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