LEILA FADEL, HOST:
Today, the Supreme Court hears arguments in a case with potentially profound economic consequences. It's about President Trump's use of tariffs to fight a trade war with countries around the world. 91ÖÆƬ³§ legal affairs correspondent, Nina Totenberg, reports.
NINA TOTENBERG, BYLINE: Standing in the Rose Garden last April, President Trump proclaimed what he called Liberation Day.
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PRESIDENT DONALD TRUMP: April 2, 2025 will forever be remembered as the day American industry was reborn.
TOTENBERG: Trump's executive order initially imposed 10% tariffs against most countries doing business with the United States, while some countries like China were slapped with tariffs of as much as 145%, and allies like Canada and Mexico - 25%. In an interview with CBS's "60 Minutes" this week, Trump boasted about the deal he just negotiated with China.
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TRUMP: I said, look, if you don't open up, then what we're going to do is we're going to impose 100% tariff over and above what you're already paying. And as soon as I said that, they came to the table.
TOTENBERG: But the back-and-forth on tariffs around the world spooked American businesses, and they challenged the tariffs in court, contending that the president had exceeded his authority. Three federal courts have now ruled against Trump's tariffs, and today, the Supreme Court hears arguments in the cases. One of the challengers is Victor Owen Schwartz, a wine and spirits importer from upstate New York who's been in business for 40 years.
VICTOR OWEN SCHWARTZ: And the thing is there's such a misconception out there that foreign entities are paying this.
TOTENBERG: As he points out, tariffs are taxes paid on imported goods.
SCHWARTZ: I can't say this enough times. Americans are paying the taxes. American business is paying the taxes, and it will be passed on to American consumers.
TOTENBERG: For small businesses like his, he says, it's not just the 15% import taxes he's paying, but the tariffs have plunged the value of the dollar compared to the euro. And when you add up all those costs, he says, they amount to about 35% more that he has to pay for his imported wines and spirits.
SCHWARTZ: You think I can increase the price of Sancerre by 35%?
TOTENBERG: So he charges more, eats part of the tariffs, and is down to a bare-bones profit that, in the long run, he says, is unsustainable. Countering that argument is President Trump, who sees tariffs as bringing in trillions of dollars to the federal government to be spent on his priorities. Tariffs, he says, are the most beautiful word in the dictionary.
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TRUMP: These tariffs, they're going to make us rich as hell. It's going to bring our country's businesses back that left us.
TOTENBERG: Whether that's true or not is likely not going to make much difference to the Supreme Court. The issue the justices must resolve is whether the president has the power to set tariff rates on his own under the International Emergency Economic Powers Act, known as IEEPA. Three lower courts have ruled that Trump exceeded his authority under both the statute and the Constitution. But the president argues that both allow him to impose tariffs in order to deal with persistent trade imbalances and to stem the flood of fentanyl coming into the United States. Both, he asserts, present national emergencies and pose a threat to national security. In arguments before the U.S. Court of Appeals for the Federal Circuit, Justice Department lawyer Brett Shumate, representing the administration, put it this way.
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BRETT SHUMATE: For decades, IEEPA has been one of the most powerful tools that any president can use to protect our national security, our foreign policy and our economy.
TOTENBERG: But, pressed by the judges, Shumate conceded that in the 50-year history of IEEPA, this is the first time any president has tried to use the statute to impose tariffs on his own. Indeed, he went further, contending that presidential tariffs are not even subject to review by the courts. The only check on the president's tariff power, he said, would be if Congress were to change the law. Countering that argument today, lawyer Neal Katyal will tell the justices that the word tariff isn't even in the IEEPA statute and that there is, quote, "zero" authority under the statute to justify such sweeping presidential authority when the Constitution itself gives the legislature, not the president, the power to tax.
NEAL KATYAL: The idea that every president had this power all along - Presidents Reagan to Obama - and none of them knew it, and all of them have been spending all of this time negotiating with the Congress to try and get tariff authority when they had it from the start is just too fanciful to be believed.
TOTENBERG: He notes that Congress has created an extensive trade architecture, governing everything from how a president may deal with trade deficits and national security importation questions. For instance, a different statute does allow the president to increase tariffs by 15% when there's a serious trade deficit, but only for 150 days.
KATYAL: President here has said, I can blow past all of those things and do whatever I want.
TOTENBERG: And that, he maintains, is contrary to the nation's history dating back to its founding.
KATYAL: That is why we had the Boston Tea Party. It is why a revolutionary war was fought. The idea that you can tax Americans through the monarch's decision alone is as foreign to our Constitution and our traditions as anything I have ever seen.
TOTENBERG: The briefs filed by interested groups in today's case are remarkably lopsided, with 38 briefs supporting the challengers representing hundreds of organizations and individuals on the right, left and center. Also supporting the challengers are a large group of national security experts from previous Republican and Democratic administrations and a similarly diverse set of 44 economists on both the left and right, including four Nobel Prize winners. On the other side are just six briefs, mainly representing individuals who did not want to be interviewed for this story. That said, the case is not a slam dunk, says conservative scholar Jonathan Adler of William & Mary Law School.
JONATHAN ADLER: In general, the court is very reluctant to second guess presidential determinations that something implicates national security or that there is an exigency.
TOTENBERG: Of course, just what are exigent circumstances is often in the eye of the beholder, and the current court often rejected the Biden administration's assertion of exigent circumstances. Nina Totenberg, 91ÖÆƬ³§ News, Washington.
(SOUNDBITE OF THE OLYMPIANS' "VENUS") Transcript provided by 91ÖÆƬ³§, Copyright 91ÖÆƬ³§.
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