Supreme Court Oral Arguments Hint Trump May Lose on Reciprocal Tariffs

Polymarket odds plunged as low as 28 percent, now 31 percent.

Court Skeptical

The Supreme Court heard oral arguments today on reciprocal tariffs. But it may take a while for a ruling.

Axios reports Supreme Court Sounds Skeptical of Trump’s Wide-Ranging Tariffs

The big picture: Some of the conservative justices seemed skeptical that Trump has the power to impose such far-reaching tariffs. A ruling against Trump could be devastating to one of his signature second-term priorities.

Driving the news: The court heard oral arguments on Wednesday in a challenge to a slew of Trump’s tariffs, including the “Liberation Day” levies and a separate set imposed on Canada, Mexico and China.

• At least two of the likely swing votes in this case — Chief Justice John Roberts and Justice Amy Coney Barrett — indicated they may be inclined to slap down, or at least curb, the lion’s share of the tariffs.
• “The vehicle is imposition of taxes on Americans, and that has always been a core power of Congress,” Roberts said during the arguments.

Catch up quick: A federal appeals court ruled that many of Trump’s tariffs are illegal, leaning on the same basic logic that the Supreme Court used to strike down some of President Biden’s most sweeping uses of unilateral authority.

• The Supreme Court’s “major questions doctrine” holds that the executive branch can’t enact programs that have “vast economic and political significance” without explicit authorization from Congress.
• The justices used that doctrine to strike down Biden’s plan for student-loan forgiveness and a COVID-era eviction moratorium. Trump’s tariffs have vastly bigger economic and political significance than either of those policies, courts in the tariff cases ruled, and therefore run afoul of the major questions doctrine.
• What they’re saying: Roberts noted that Trump is claiming “a power to impose tariffs on any product, from any country, for any amount, for any length of time.”
• “It does seem like that’s major authority,” Roberts said.
• Between the lines: The Justice Department argued first that Congress has, in fact, given the president sweeping tariff powers.
• But the statute it’s relying on hasn’t been used this way before, and some of the conservative justices seemed skeptical of the administration’s rationale.
• “It’s pretty clear that Congress was trying to constrain the emergency powers of the president,” not expand them, Barrett said.

Yes, but: Oral arguments are an imperfect guide to how the justices are likely to rule, and the court’s conservatives asked tough questions of all sides.

• Roberts questioned whether a ruling against Trump would unfairly tie the president’s hands in foreign policy. Barrett also expressed concern about restricting trade too heavily, and about the process of reimbursing businesses for tariffs they’ve already paid.
• Justices Clarence Thomas and Samuel Alito seemed firmly on Trump’s side, and Justice Brett Kavanaugh seemed to be leaning in that direction. The three liberal judges appeared united against Trump.

Please reconsider what I had to say ahead of the Appeal Court Ruling.

I gave an assessment of the the justices individually.

Trump Needs an Activist Court to Win

I discussed this on August 27, in Can Trump’s Tariff Revenues Help Pay for the Federal Budget Deficit?

It would be amazing if the appeals court ruled for Trump. But the key question is how the Supreme Court will rule.

Recall that the Court ruled against Biden on student loans largely on the basis of the “major question”. There are even more reasons to strike the idea here.

However, although it’s constitutionally clear, a ruling against Trump is by no means certain.

Hypothetical Vote Count

The three liberal justices are certain to vote against Trump. That means we need two more.

Pair 1: Barrett and Roberts  
Pair 2: Barrett and Gorsuch
Pair 3: Gorsuch and Roberts

If I am correct, I think Barrett is already on board. I can’t help but think Roberts will go with the majority, and perhaps decide. 

If it’s pair 2, add Roberts for a 6-3 decision. The bigger the majority, the more cover for all of them.

So expect an appeals court ruling against Trump. Then we will see if common sense, precedent, major questions, and emergencies apply to Republican presidents as well as Democrats.

No Surprises Here

In today’s oral arguments, my deciding trio came into play. We did not hear from Gorsuch today that I am aware of.

I especially like Barrett’s comment “It’s pretty clear that Congress was trying to constrain the emergency powers of the president,” not expand them.

In the no surprise column, Justices Clarence Thomas and Samuel Alito seemed firmly on Trump’s side, and Justice Brett Kavanaugh seemed to be leaning in that direction.

I always figured Trump had 3 solid votes and 3 liberal justices would go the other way.

The trio I discussed well in advance Barrett, Roberts, and Gorsuch are highly likely to decide the case.   

Edit – Gorsuch

The Wall Street Journal notes Justice Gorsuch Grapples with Textualism Concerns.

Justice Neil Gorsuch is well known for holding two firm convictions about legal theory: He is deeply concerned with the Constitution’s separation of powers, and he is a strict textualist who tries to read the words of a statute literally. His comments today suggest that this case may involve a tension between those two strains of his jurisprudence.

Earlier in the argument, in a series of questions to the solicitor general, he emphatically suggested that any attempt by Congress to delegate broad tariff authority to the president would violate the separation of powers.

But later, in an exchange with lawyer Neal Katyal, he suggested that a textualist reading of the statute at issue might favor Trump, because the statute’s language about authorizing the president to “regulate” imports is written broadly.

“Regulate is a capacious verb,” Gorsuch said.

The linchpin, Gorsuch then suggested, might be the “major questions doctrine”—the rule that Congress needs to be especially clear if it wants to authorize the president to enact transformative policies.

“Do you need ‘major questions’ to win?” Gorsuch said to Katyal. “I think you might.”

Gorsuch could go either way. If the case goes against Trump, Roberts will try hard to get Gorsuch on board making it 6-3.

Roberts will not want to take the wrath of Trump for the decision. A 6-3 decision will allow less complaining, but complaining there would be anyway.

I am a big fan of separation of powers and the “major questions” issue. It was on those grounds Biden lost his cases on student loans.

Too many people afflicted with Trump Worship Syndrome (TWS) want major questions only to apply to Democrats.

Looking Ahead

Trump is highly likely to use other means and other tariff authorities to achieve the same end.

I discussed this in advance too.

On June 6, I surmised (prematurely because this is still uncertain)  Reciprocal Tariffs Are Dead, but Trump Has 7 Other Options to Discuss

Trump wants to maneuver around the court’s tariff crackdown. His success will be limited.

Although his “success” will limited, Trump can and will do many more damaging actions.

Following the Appeals Court ruling, on August 30 I commented Trump Moans About Tariff Ruling, Puts Direct Pressure on 4 Supreme Court Justices

Pressure is on Justices Thomas, Gorsuch, Kavanaugh, and Alito.

Trump Will Double Steel and Aluminum Tariffs to 50 Percent

On May 31, I commented Trump Will Double Steel and Aluminum Tariffs to 50 Percent

Insistent that US manufacturers who use steel will pay still more, especially the auto industry and small businesses, Trump Says Steel and Aluminum Tariffs Will Double to 50%.

Steel and aluminum tariffs are incredibly stupid. However, they are far more likely to stick because the Supreme Court may not want to buck Trump on matters of national security.

On grounds of national security, Trump kicked the US with absurd tariffs on steel and aluminum.

The aluminum tariffs have already backfired as discussed previously.

On September 6, I noted Trump’s Aluminum Tariffs Seriously Backfire Already

Tariffs did not and will not bring production back to the US.

And so here we are. Trump will impose more stupid tariffs on more stupid grounds.

If common sense prevails, the reciprocal tariffs will bite the dust with the rationale of Barrett leading the way.

I still caution this is not over until it’s over, but I am pleased with how things sit, and if I can say so, my analysis to date.

Addendum

I added an inline edit on comments from Justice Gorsuch.