In brief
As the US Supreme Court prepares to hear a pivotal case regarding the legality of tariffs imposed by the Trump administration, the stakes are incredibly high. Small businesses, groups of states, and legal analysts await the outcome, which could redefine presidential power and the future of US trade policy. A favorable ruling could disrupt Trump's tariff strategy and require reimbursement of billions in collected tariffs, affecting both domestic businesses and international trade relationships.
What may be the biggest battle yet in Donald Trump's trade war is about to begin.
The Trump administration heads to the US Supreme Court on Wednesday, facing off against small businesses and a group of states who contend most of the tariffs it has put in place are illegal and should be struck down.
If the court agrees with them, Trump's trade strategy would be upended, including the sweeping global tariffs he first announced in April. The government would also likely have to refund some of the billions of dollars it has collected through the tariffs, which are taxes on imports.
The final decision from the justices will come after what could be months of poring over the arguments and discussing the merits of the case. Eventually they will hold a vote.
Trump has described the fight in epic terms, warning a loss would tie his hands in trade negotiations and imperil national security. He has even suggested he might take the unprecedented step of hearing the arguments at court in person.
If we don't win that case, we will be a weakened, troubled, financial mess for many, many years to come, he said.
The stakes feel just as high for many businesses in the US and abroad, which have been paying the price while getting whipped about by fast-changing policies.
Trump's tariffs will cost Learning Resources, a US seller of toys made mostly overseas and one of the businesses suing the government, $14m this year. That is seven times what it spent on tariffs in 2024, according to CEO Rick Woldenberg.
They've thrown our business into unbelievable disruption, he said, noting the company has had to shift the manufacturing of hundreds of items since January.
Few businesses, though, are banking on a win at the court.
We are hopeful that this is going to be ruled illegal but we're all also trying to prepare that it's setting in, said Bill Harris, co-founder of Georgia-based Cooperative Coffees.
His co-op, which imports coffee from more than a dozen countries, has already paid roughly $1.3m in tariffs since April.
In deciding this case, the Supreme Court will have to take on a broader question: How far does presidential power go?
Legal analysts say it is hard to predict the justices' answer, but a ruling siding with Trump will give him and future White House occupants greater reach.
Specifically, the case concerns tariffs that the Trump administration imposed using the 1977 International Emergency Economic Powers Act (IEEPA), which the White House has embraced for its speed and flexibility.
By declaring an emergency under the law, Trump can issue immediate orders and bypass longer, established processes.
Opponents say the law authorises the president to regulate trade but never mentions the word tariffs, and they contend that only Congress can establish taxes under the US Constitution.
Three lower courts have ruled against the administration. After the Supreme Court hears arguments, it will have until June to issue its decision, although most expect it to come by January.
Whatever it decides has implications for roughly $90bn worth of import taxes already paid. Trump officials have warned that sum could swell to $1tn if the court takes until June.
The case has already complicated the White House's trade deals, such as one struck with the European Union. European Parliament is currently considering ratifying this agreement, contingent on the Supreme Court's outcome.
The future of Trump's tariffs hangs in a precarious balance as legal battles continue, influencing not only domestic policies but also international relationships.
