Supreme Court prepares to weigh tariffs fight in test of Trump’s power

Washington — The last several months have been turbulent for Lindsay Hagerman.

Hagerman, a co-owner of RainCaper, a Pennsylvania-based company that sells art-inspired gifts and travel accessories, has found herself doubting her pricing strategy as tariffs on goods imported from China have fluctuated between 10 and 20 percent, then back down to 145 percent.

Hagerman asked CBS News, “Is it temporary? Is this the new normal? You’re struggling with how do we price — do we change prices now? Wait? I don’t want to gouge people.”. “That’s not a good way to conduct business. However, I also have to pay for expenses. A “.

Almost ten years ago, Hagerman and her mother founded RainCaper, which sells rain capes, travel accessories, umbrellas, scarves, shawls, and drinkware to retailers, boutiques, museums, and individual customers via its website.

Her business imports rain capes and umbrellas made of waterproof fabric from China because neither can be produced in the United States. In S. said Hagerman. RainCaper has consequently found itself at the forefront of President Trump’s tariff-heavy trade war.

However, Hagerman and entrepreneurs in the U.S. To S. could see some stability in the upcoming weeks, as the Supreme Court is scheduled to decide on Wednesday whether Mr. Trump can use a federal emergency powers law to unilaterally impose tariffs on almost all nations.

His most expansive duties have been declared unlawful by lower courts; if the Supreme Court upholds these rulings, the president’s attempts to use tariffs as leverage in international negotiations and to put pressure on the United States could be severely damaged. To S. businesses to put money into domestic manufacturing. However, a decision against Mr. Trump, who appointed three of the justices, could also have a big impact on presidential authority.

Many small businesses have had to invest time and resources in keeping up with the rapidly shifting tariff rates and countries targeted since he announced the broad global tariffs earlier this year. They also had to decide how to react to the rising costs of importing the components required for their products.

Two of RainCaper’s seven employees who worked in operations and customer service were let go, according to Hagerman, who also reduced spending.

Because of the levies, she also looked into manufacturing outside of China, but Hagerman ultimately decided against it due in part to the large investment needed. Additionally, she stated that it was not feasible to travel to nations like Bangladesh and Cambodia to view other possible facilities because she is a military spouse whose husband is out of state.

Hagerman stated, “It’s just not true when the administration claims we’re bringing trillions into the economy and says China is paying these tariffs, Brazil is paying these tariffs.”. “The importer is responsible for paying tariffs. I’m in charge of imports. A “.

The Supreme Court was given a “stark choice.”.

Dear Mr. Through a series of executive orders, Trump has imposed two sets of tariffs using a federal statute known as the International Emergency Economic Powers Act, or IEEPA. Almost every U was given a baseline rate of 10% in the first. To S. trading partner, in addition to higher reciprocal tariffs on over 50 nations; the second imposed tariffs at different rates on China, Canada, and Mexico.

The president announced trade deficits and the influx of fentanyl and other illegal drugs into the United States in his executive orders. For S. as national emergencies, which gave IEEPA more authority. In order to address “any unusual and extraordinary threat” to foreign policy, national security, or the United States, the law gives the president the authority to “regulate…” importation. To S. economy, which he claimed is made up of drug trafficking and trade imbalances.

The administration has reached trade agreements with ten countries and the European Union since Mr. Trump announced the tariffs in February and April, on what he called “Liberation Day.” He also stated that it is “actively negotiating” with additional foreign countries.

However, two groups of small businesses and a group of twelve states filed lawsuits shortly after the president announced the tariffs, claiming that IEEPA does not permit the broad duties. The president is not authorized by IEEPA to impose the global and trafficking tariffs unilaterally, according to lower courts’ rulings against the administration.

In one instance, Democratic officials from twelve states and five small businesses were involved. The S. The Court of Appeals for the Federal Circuit declared, 7-4, that numerous levies imposed by the president are unlawful. However, a lower court’s injunction was overturned by the Federal Circuit, allowing the Trump administration to continue collecting the global and trafficking tariffs for the time being.

Mr. Additionally, Trump has continued to rely on IEEPA to impose new levies or modify existing rates. For example, he raised Canadian tariffs to 35 percent, despite the fact that many of its goods are exempt; he imposed an additional 40 percent duty on Brazil; and he threatened to impose an additional 100 percent duty on China, although the president has since backtracked. Following a meeting with Chinese President Xi Jinping last week, Mr. Trump declared that he would lower the tariffs on goods imported from China.

Congress has long granted the president broad authority to impose tariffs in order to address emergencies, according to the Trump administration, which is pleading with the Supreme Court to uphold the levies. In a filing, Solicitor General D. John Sauer stated that because IEEPA grants the president the authority to “regulate… importation,” it is a continuation of that tradition. The “.

Sauer also asserted that the tariffs are an exercise of Mr. Trump’s power over national security and foreign affairs, and argued courts should give deference to his determination that the duties are best suited for addressing national emergencies arising from trade deficits and drug trafficking.

He claimed that invalidating those taxes would have “catastrophic consequences” for the economy, foreign policy, and national security.

“To the President, these cases present a stark choice: Without tariffs, we are a poor nation; with tariffs, we are a rich nation,” Sauer wrote.

Dear Mr. Trump declared that he intended to attend the arguments in person and referred to the case as “one of the most important in the history of the country.”. On Sunday, however, he changed his mind and stated on social media that he “did not want to distract from the importance of this decision.”. The “.

Mr. Trump’s tariffs have serious economic repercussions, the small businesses’ attorneys told the high court in documents. According to a Tax Foundation analysis, the duties will cost Americans $1.7 trillion in additional taxes by 2035, slow GDP growth by 0.7 percent annually, and lower income by 1.1 percent in 2026.

Up until now, no president has used IEEPA to impose tariffs, and neither that term nor any similar ones are mentioned in the legislation. In filings, Neal Katyal, who will represent small businesses before the Supreme Court, cautioned that the Trump administration’s interpretation of IEEPA is a “breathtaking assertion” of power that needs clear congressional approval.

If the Supreme Court concurs with Mr. Trump that the phrase “regulate…” importation in IEEPA gives the president the authority to tax, then “the president, empowered by a supercharged U.S. To S. Code, could impose taxes on everything from cars to zoos,” Katyal wrote in a document.

“The government’s theory is really that the president has the ability to impose sales taxes, property taxes, use taxes, essentially a wealth tax under IEEPA,” Duke Law’s international law expert Timothy Meyer told CBS News. “The justices will have to deal with this incredibly wide range of the government’s argument. A “.

Additionally, the plaintiffs contended that trade deficits hardly represent a “unusual and extraordinary threat,” given that imbalances have persisted for fifty years and that Mr. Trump has called them “persistent.”. A “.

Furthermore, Congress alone has the authority to impose taxes and duties, and any delegations of that authority have been “explicit and strictly limited,” they stated. In fact, Congress has delegated its tariffing authority in a number of other statutes, some of which Mr. Trump has utilized, but they place restrictions on the president.

“The reason President Trump likes IEEPA is that, in contrast to every other statute that gives the president the power to impose tariffs, IEEPA places no restrictions on what the president can do in terms of the amount of the duty or the length of time that they can remain in place, and it requires no investigation or fact-finding other than an unreviewable declaration of a national emergency,” Meyer explained.

“It doesn’t do any of those things because it doesn’t mention duties at all, so it seems pretty likely that Congress did not intend to include substantial power to impose tariffs in the statute,” he said. A “.

If Mr. Trump wins before the Supreme Court, future administrations will probably use IEEPA’s authority to set out broad tariffs rather than look to other authorities that are more narrow and impose certain requirements, according to Jeffrey Bialos, a partner at Eversheds Sutherland who specializes in international law.

“This is not a foreign matter. It’s a matter of what authority you require and what can be delegated under Article I Section 8,” Bialos stated. The significance of what was done here is whether Congress intended to permit the president to repeal the US tariff code in its entirety. The “.

An examination of presidential power.

You, Mr. In his first few months back in office, Trump has exercised his presidential power in a number of ways, such as firing members of the executive branch and withholding $4 billion in congressionally authorized foreign aid.

In the majority of cases that reached the Supreme Court in their early stages, the conservative justices permitted the Trump administration to temporarily impose specific policies while lower court proceedings were ongoing.

The Supreme Court will consider the case’s legal merits in the tariff dispute involving Mr. Trump, something it hasn’t done in the previous cases. However, the court case, like those others, may have an impact on the president’s desired authority.

Meyer stated, “What the Supreme Court is really deciding here is whether or not to give the administration a free pass any time it’s able to connect some sort of policy initiative to some sort of international dimension.”. “The administration will use its emergency and international affairs powers to the fullest extent possible if you set up a system where you get deference if you can classify something as a foreign affairs issue, but there is no deference if it’s done by an administrative agency pursuing some sort of statutory delegation. A “.

Using what is known as the major questions doctrine to invalidate former President Joe Biden’s plan to erase more than $400 billion in student loan debt and prevent an eviction moratorium during the COVID-19 pandemic, the Supreme Court has been skeptical of broad assertions of executive authority on matters of major political and economic significance when Congress has not spoken clearly.

Although the Trump administration contends that it does not apply to issues of foreign policy and national security, this legal principle is brought up in the dispute over his tariffs. Small business attorneys, however, argue that tariffs are a tax on the American people and that Congress has the authority to impose taxes under the Constitution.

“Taxing American citizens is not foreign policy or national security, and Emily Ley and other regular Americans pay the tariffs,” stated Mark Chenoweth, chief legal officer and president of the New Civil Liberties Alliance. In a separate challenge to Mr. Trump’s tariffs, the organization is standing up for a stationary company with headquarters in Pensacola and its CEO, Emily Ley. The Supreme Court does not have that case before it.

According to Chenoweth, “it is incorrect to argue that unilateral taxation of American citizens is national security or foreign policy.”. “If the president is able to unilaterally increase taxes on American citizens, that would be taxation without representation, which is what we fought a Revolutionary War over.”. The “.

a “mass extinction” of tiny companies.

The government has kept collecting the duties while the Supreme Court considers the cases, even though lower courts have agreed that Mr. Trump’s global and trafficking tariffs are unlawful.

For Julie Robbins, CEO of EarthQuaker Devices, that has meant paying nearly $40,000 in levies through the end of October.

The family-run business manufactures guitar pedals in Akron, Ohio. EarthQuaker’s product line includes 50 pedals that require more than 900 unique components that it sources from 15 different countries, including Mexico, Portugal, Poland, Ukraine and several in Asia.

To assist with logistics, Robbins said EarthQuaker works with wholesalers that vet overseas manufacturers and source the mechanical and electrical components needed for its pedals. When the goods reach the United States, the wholesalers pay the tariffs. To S. ports and subsequently transfer some of the responsibilities to EarthQuaker, she stated.

Upon hearing Mr. Trump would be imposing his sweeping levies, one of Robbins’ first moves was to search for domestic suppliers. She ultimately found they either don’t exist for the parts that go into EarthQuaker’s guitar pedals or they charge significantly more than her international sources.

Plus, breaking off long-held relationships with overseas suppliers would be risky and disrupt a supply chain that took years to perfect, she said, since there were no guarantees other manufacturers or their products would be reliable.

She stated, “We’ve spent 20 years developing this supply chain.”. “It’s not something that happened overnight and so in order to redo it, I can’t see it happening. A “.

Robbins said EarthQuaker could save money by having their pedals made in-full overseas, rather than having the parts shipped to the U. In S. and the pedals put together at its Ohio manufacturing plants. But doing that wouldn’t align with the company’s values of keeping well-paying jobs in Akron, a city that was once known as the “Rubber Capital of the World” for its production of rubber products.

“When people try to oversimplify and say you should be manufacturing in the United States, we are manufacturing in the United States, but you can’t make the raw materials in the U. To S. Robbins stated.

EarthQuaker doesn’t have deep-pocketed investors and has eroded its cash cushion as it has navigated the whiplash of changing tariff rates, she said. The company also opted not to replace employees that have left in recent months, and it pulled two open positions.

“My concern is there’s just going to be this mass extinction of small business,” Robbins said. “It’s not sustainable. The ”

Cephalofair Games, a California-based company that designs and publishes board games, has paid more than $144,000 in new tariffs over the past few months, according to its chief operating officer, Price Johnson.

In July, Cephalofair informed its customers it would be adding “tariff surcharges” as a result of the import taxes and has increased the prices of its products. It has also reduced the salaries of staff and furloughed workers.

The company manufactures its games in China and has had to make adjustments to product runs in response to the tariffs. Johnson told CBS News that a run of 7,000 units is nearly completed, but instead of bringing it into the U. S. , the company will instead send its games to Europe, the United Kingdom and Australia.

In the meantime, Johnson said the company continues to design and develop new games, but is waiting to hear from the Supreme Court before moving forward with manufacturing.

Cephalofair wasn’t impacted by tariffs during the first administration and had been preparing for tariffs on Chinese imports of between 10 percent and 15 percent, Johnson said. But these days, he and his colleagues have taken to watching Mr. Trump’s social media feed for tariff-related announcements.

The uncertainty has “removed any ability for us to plan or rely on what we as importers can operate on,” Johnson said. “We have to plan on not being able to plan or trust what U. S. policy is surrounding trade. “.