Resolution Criteria (will resolve when court rules if possible)

The Supreme Court will determine whether the International Emergency Economic Powers Act (IEEPA) authorizes the second Trump administration to implement various tariffs by executive order, and if the IEEPA does authorize the tariffs, whether the IEEPA is an unconstitutional delegation of legislative power to the executive branch due to the Taxing and Spending Clause of Article One, Section Eight of the United States Constitution.

Resolution will be based on the Supreme Court's final written opinion in the consolidated cases Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc. The market will resolve according to the Court's ruling on the primary question of whether IEEPA authorizes the tariffs, and secondarily on whether any such authorization constitutes an unconstitutional delegation. Oral arguments were heard on November 5, 2025. The Court's decision timeline is uncertain but expected within the coming months.

Background

In February 2025, President Donald Trump announced tariffs on Canada, Mexico, and China, citing the IEEPA as the statutory authority for doing so. After implementing other tariffs citing different statutory authorities, Trump announced the global Liberation Day tariffs also citing the IEEPA the following April. In Learning Resources, the District Court for the District of Columbia ruled the tariffs were unconstitutional in May 2025. The United States Court of International Trade ruled in May 2025 that the president does not have the authority to use the IEEPA to set tariffs in this way, and the ruling was upheld on appeal by the en banc Federal Circuit Appeals Court in August 2025.

During more than two-and-a-half hours of oral arguments, a majority of the justices appeared to agree with the small businesses and states challenging the tariffs that they exceeded the powers given to the president under a federal law providing him the authority to regulate commerce during national emergencies created by foreign threats. The Supreme Court justices repeatedly pressed the U.S. government to identify explicit statutory language in IEEPA that authorizes the president to impose tariffs. Although the statute empowers the president to "issue … instructions, licenses or otherwise," to "investigate, regulate or prohibit" imports" of "property in which any foreign country or a national thereof has any interest" during a declared national emergency, it does not mention "tariffs," "duties" or "taxes."

Considerations

High tariffs on America's trading partners are likely to remain in place even if the Supreme Court rules that President Trump improperly invoked federal emergency powers to impose the levies, as Trump is unlikely to abandon tariffs and has other legal tools at his disposal to maintain sharply higher duties on imports. An adverse ruling for Mr. Trump could require the U.S. government to offer billions of dollars in refunds to businesses. Through August, importers had paid a total of nearly $89 billion in IEEPA tariffs.