A federal appeals court struck down a majority of Trump’s tariffs last Friday. This ruling, which does not go into effect immediately, is almost certainly heading to the Supreme Court.
Here’s why you should hope the Supreme Court upholds the federal appeals court decision even (or maybe especially) if you support Trump’s tariffs.
A little background
The court struck down the tariffs that were implemented via the International Emergency Economic Powers Act (IEEPA), a 1977 law that allows the President to regulate international commerce in response to an “unusual and extraordinary threat.”
The Trump administration is arguing that trade deficits qualify as just that—an unusual and extraordinary economic threat. The IEEPA tariffs represent about 70% of the tariffs implemented thus far in 2025.
[Side note: the constitution is explicit on this one. The power to set tariffs belongs to Congress, not the President.]
A usual and ordinary nonthreat
We’ve been running a trade deficit for fifty years. While many would consider that an unsavory outcome, it’s hardly an emergency, especially with the US dollar still strong, the stock market at (or near) all time highs, and unemployment in the low 4% range.
And even if you think that large trade deficits represent a national security threat, it’s not a new or unusual one (and it certainly isn’t one that requires tariffs on countries with which we have a trade surplus …).
Merits aside, here’s why you should hope they uphold
If Trump wins this case, the Supreme Court will be granting the President the power to unilaterally set trade policy for any perceived national security threat. Even if you like Trump’s tariffs, you have to see the problem here.
Is climate change a national security threat? President Gavin Newsom thinks so, and he’s putting 300% tariffs on all gas-powered cars and related components and 900% tariffs on fossil fuels.
President Jill Stein isn’t even bothering with tariffs. She’s just banning fossil fuel imports altogether. And while we’re at it, why not ban animal product imports? Get your Wagyu beef while you can, folks.
Does gun violence qualify as a national security threat? Can President Ocasio-Cortez ban the import of firearms and related components? Emergency!
These are outlandish examples, but we don’t even need a hypothetical Democrat to make the case. If you like tariffs, get Congress to pass them, because President Nikki Haley might not let them stick around too long.
The point is, don’t forge a sword you wouldn’t want your enemy to wield, especially when they definitely will get the chance to wield it.
If the Supreme Court does the right thing…
Then the government will have to refund every dollar collected with the illegally imposed tariffs. This is great for businesses.
This is less great for consumers. First, they won’t be refunded the portion of the tariff costs that were passed on to them. Second, companies that have raised their prices because of the tariffs surely aren’t going to lower them, especially not when there are other (more legally sound but limited) ways for the administration to implement similar tariffs.
For what it’s worth, some hedge funds are betting on this outcome, offering companies a share of their tariff costs in cash in exchange for full rights to any refund. Notably, one of the first to jump on this was Cantor Fitzgerald, where Secretary of Commerce Howard Lutnick worked for the past 40 years.
One final note
Treasury Secretary Scott Bessent warned the appeals court that ruling against the tariffs would cause “dangerous diplomatic embarrassment.” It’s a little late for that.
What’s Next
This week brings us a critically important jobs report, new construction spending data (it just came out, and it’s pretty bleak), and a lot more. We’ll dive into that and more in Week in Review, our every-Friday post that covers all the economic news and data in a breezy, five minute read.
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Hard to believe that we are in a situation where the "right thing" is simply interpreting the law as written.