The Supreme Court heard oral arguments yesterday on what may prove to be one of the most consequential cases of its term—and President Donald Trump's legal foundation for tariffs appears to be losing.
During contentious questioning on Wednesday, justices across the ideological spectrum expressed deep skepticism about the administration's claim that the 1977 International Emergency Economic Powers Act (IEEPA) grants the president unilateral authority to impose sweeping tariffs on dozens of nations.
Both conservative and liberal justices sharply challenged Solicitor General D. John Sauer's defense of the reciprocal and fentanyl-related tariffs that have reshaped global trade flows since Trump's return to office.
Lower courts have already ruled against the administration, finding that Trump exceeded his statutory authority by using an emergency powers law designed for national security crises to implement what amounts to a wholesale restructuring of American trade policy. The presence of Treasury Secretary Scott Bessent in the courtroom underscored the administration's recognition of the stakes involved.
The legal challenge strikes at the constitutional separation of powers between Congress and the executive branch.
Critics argue that Trump has usurped Congress's exclusive authority to levy taxes and regulate international commerce-a fundamental principle embedded in Article I of the Constitution. The administration's defense rests on an expansive interpretation of the IEEPA that would allow any president to unilaterally reshape trade relationships by declaring an economic emergency.
If the justices reject this reasoning, as Wednesday's arguments suggest, the decision would not invalidate specific tariff measures; it would fundamentally constrain presidential power over trade policy for generations to come. The Court's apparent skepticism suggests that even Trump-appointed justices may be reluctant to endorse such a dramatic expansion of executive authority, particularly when it directly conflicts with Congress's enumerated powers.
For business leaders, the implications extend far beyond abstract constitutional theory.
Corporate America is in a state where it needs to adapt supply chains, renegotiate contracts, and restructure operations to accommodate tariff regimes that might be illegal. This regulatory uncertainty has the most chilling impact on business. Not knowing the rules and having the rules change on a whim is not how business should operate.
Even a favorable Supreme Court ruling against the administration would create even more chaos in global trade relationships while simultaneously raising thorny questions about the hundreds of billions of dollars already collected under these tariffs.
Companies that paid these duties may seek refunds, creating a fiscal nightmare for the Treasury and potentially resulting in windfalls for importers. More fundamentally, the uncertainty surrounding tariff policy makes long-term capital allocation decisions nearly impossible. CEOs cannot confidently invest in new facilities, negotiate multi-year supply agreements, or develop market entry strategies when the basic framework of trade policy hangs in judicial limbo.
The strategic implications for corporate planning are equally troubling.
If the Court strikes down the tariffs, Trump will likely seek alternative legal mechanisms to maintain his protectionist agenda, potentially triggering new rounds of litigation and policy uncertainty. Congress could theoretically pass legislation explicitly authorizing tariffs, but the political dynamics make such action unlikely in a divided and slothful government.
Meanwhile, America's trading partners face their own dilemma: should they negotiate with an administration whose trade policies may be subject to judicial invalidation, or should they wait for legal clarity while their exporters suffer? This uncertainty poisons the well for serious trade negotiations and encourages partners to hedge by diversifying away from American markets.
The business community now confronts a period of maximum ambiguity precisely when global economic conditions demand strategic clarity.
Companies that absorbed tariff costs rather than passing them on to consumers made balance sheet commitments based on policies that may be subject to change. Financial models built on current tariff structures could require wholesale revision.
The only certainty is uncertainty—and that represents perhaps the most corrosive force in modern business planning. Markets can adapt to almost any policy regime, but they cannot efficiently allocate capital when fundamental rules remain subject to judicial nullification. Wednesday's Supreme Court arguments suggest American business may be entering precisely such a period, with implications that will reverberate through boardrooms and balance sheets for years to come.
It would be helpful if Congress and the administration remembered that the business of America is business, and when a company is unaware of the rules and faces regulatory uncertainty, no one benefits.
-Marc
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Marc A. Ross is a geopolitical strategist and communications advisor, authoring a book entitled Globalization and American Politics: How International Economics Redefined American Foreign Policy and Domestic Politics.
He is the founder and chief communications strategist of Caracal, a geopolitical business communications firm specializing in global business issues at the intersection of globalization, disruption, and politics. Additionally, he is the founder and curator of Brigadoon, a global network of founders and thought leaders shaping commerce and culture.
