The U.S. Supreme Court agreed this week to take up a high-stakes legal challenge that could reshape the limits of presidential authority on trade. At issue is whether former President Donald Trump acted lawfully when he used the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs on imports without congressional approval.

The Court's decision to hear the case under an expedited schedule puts it on a direct path to determine the constitutionality of a central policy pillar of Trump's second term. The tariffs in question remain in effect while the justices prepare for oral arguments in early November.

The legal controversy stems from Trump's use of a decades-old law originally intended for true national security threats. Under IEEPA, presidents are permitted to regulate foreign economic transactions during a declared emergency. Trump invoked that authority to justify imposing "reciprocal tariffs" ranging from 34% on Chinese goods to 10% baseline tariffs on other nations, and a separate 25% tariff targeting countries like Canada and Mexico for what the administration described as failures to curb fentanyl exports.

Legal challenges quickly followed. A coalition of companies-including V.O.S. Selections Inc., a wine importer, and Plastic Services and Products, a manufacturer-filed suit arguing that IEEPA does not permit a president to unilaterally impose indefinite, broad-based tariffs. They were later joined by Learning Resources and hand2mind, two educational toy companies that also sued over the same issue.

In August 2025, the U.S. Court of Appeals for the Federal Circuit ruled that Trump exceeded his authority, determining that IEEPA does not grant such sweeping trade powers. The law, judges said, allows the regulation of imports only under narrowly defined emergencies-not to overhaul tariff structures worldwide. The appeals court emphasized that tariff powers are explicitly granted to Congress under the Constitution.

Despite the ruling, the tariffs remain in effect, with the Supreme Court agreeing to hear both consolidated cases. The government has until September 19 to file its initial brief, with responses due by October 20. This sets the stage for what could be one of the most consequential rulings on executive power in years.

While the legal case unfolds, the economic impact looms large. According to Treasury Secretary Scott Bessent, the federal government may be on the hook for refunds totaling up to $1 trillion if the tariffs are ultimately deemed illegal. He also noted that tens of billions of dollars have already been collected under the contested measures.

The scope of the case is narrow in legal terms but potentially broad in political and economic impact. The justices will not review all of Trump's tariffs-only those tied directly to his invocation of IEEPA. Other tariffs, such as the 50% duties on global steel and aluminum imports, were enacted under different legal authorities and remain untouched by this litigation.

The stakes are also institutional. During the Biden administration, the Supreme Court showed skepticism toward executive overreach, applying what legal scholars call the "major questions doctrine"-a standard requiring that Congress clearly authorize significant regulatory action. This doctrine was cited when the Court struck down Biden's student loan forgiveness plan, and observers believe it could play a key role in the current tariff cases.

Interestingly, both cases came to the Court on a rare point of agreement. Even some of the businesses opposing Trump's tariffs urged the justices to resolve the matter quickly, citing the economic uncertainty generated by ongoing litigation. A group of 12 states also sued to block the tariffs, arguing they hurt consumers, disrupted supply chains, and bypassed legislative oversight.

The Supreme Court's current conservative majority has generally ruled in Trump's favor during his second term. However, some legal analysts believe the justices may be more cautious in this instance, particularly given the constitutional implications and the direct challenge to Congress's enumerated powers.

As the clock ticks toward November's oral arguments, the case will continue to draw attention from lawmakers, business groups, and legal scholars alike. With billions of dollars and fundamental questions of governance at stake, all eyes are now on the Court.