World awaits landmark US Supreme Court decision on Trump’s tariffs

What may be the biggest fight yet in Donald Trump’s trade war is about to begin.

The Trump administration heads to the US Supreme Court on Wednesday, taking on small businesses and a group of countries that claim most of the tariffs it imposed are illegal and should be repealed.

If the court agrees with them, Trump’s trade strategy, including the sweeping global tariffs he first announced in April, would be upended. The government is also likely to return some of the billions of dollars it raised through tariffs, which are taxes on imports.

The judges’ final decision will come after months of studying the arguments and discussing the merits of the case. Eventually they will take a vote.

Trump described the battle in epic terms, warning that a loss would tie his hands in trade negotiations and threaten national security. He even suggested he might take the unprecedented step of hearing arguments in court in person.

“If we don’t win this case, we will be in a weak and troubled financial mess for many years to come,” he said.

The risks appear equally high for many companies in the United States and abroad, which have been paying the price while being pressured by rapidly changing policies.

Trump’s tariffs will cost Learning Resources, a US seller of toys made mostly abroad and one of the companies suing the government, $14m (£10.66m) this year. That’s seven times what it spent on tariffs in 2024, according to CEO Rick Woldenberg.

“They have been incredibly disruptive to our business,” he said, noting that the company has had to shift manufacturing of hundreds of items since January.

However, few companies count on winning in court.

“We’re hoping this will be ruled illegal, but we’re also all trying to get ready for it to roll,” said Bill Harris, co-founder of Georgia-based Cooperative Coffees.

His cooperative, which imports coffee from more than a dozen countries, has paid nearly $1.3 million (£975,000) in customs duties since April.

In deciding this case, the Supreme Court must grapple with a broader question: How far does presidential power go?

Legal analysts say it’s difficult to predict how the justices will answer, but a ruling that sides with Trump would give him and future White House occupants greater latitude.

Specifically, the case concerns tariffs imposed by the Trump administration using the 1977 International Emergency Economic Powers Act, which the White House adopted for its speed and flexibility. By declaring a state of emergency under the law, Trump can issue immediate orders and bypass longer established processes.

Trump first used the law in February to impose taxes on goods coming from China, Mexico and Canada, saying drug smuggling from those countries constituted an emergency.

He published it again in April, ordering duties ranging from 10% to 50% on goods from Almost every country in the world. This time, he said, the US trade deficit – where the United States imports more than it exports – poses an “exceptional and extraordinary threat.”

These tariffs took hold intermittently this summer as the United States pressured countries to strike “deals.”

Opponents say the law authorizes the president to regulate trade, but never mentions the word “tariffs,” and they assert that only Congress can impose taxes under the US Constitution.

They also questioned whether the issues cited by the White House, particularly the trade deficit, constitute emergencies.

Members of Congress from both parties asserted that the Constitution gives them responsibility for creating tariffs, duties, and taxes as well.

More than 200 Democrats in both chambers and Sen. Lisa Murkowski, a Republican, filed a brief with the Supreme Court, where they also argued that the emergency law did not give the president the authority to use tariffs as a tool to gain leverage in trade talks.

Meanwhile, the Senate last week took a symbolic, bipartisan step to pass three resolutions rejecting Trump’s tariffs, including one to end the national emergency he declared. They are not expected to be approved in the House of Representatives.

However, business groups said they hoped the rebuke would send a message to the judges.

Three lower courts ruled against the administration. After the Supreme Court hears arguments on Wednesday, it will have until June to issue its decision, although most expect a ruling by January.

Whatever it decides, it has implications for the estimated $90 billion in import taxes already paid — nearly half of the tariff revenue the U.S. has collected this year through September, according to Wells Fargo analysts.

Trump officials warned that the amount could rise to $1 trillion if the court takes until June.

If the government has to issue refunds, Cooperative Coffees will “absolutely” try to get its money back, but that won’t make up for all the disruption, Harris said.

His company was forced to take out an additional line of credit, raise prices, and find ways to survive with lower profits.

“This is an energy drain like I’ve never seen before,” said Harris, who is also the CFO of Campesino Cafe, one of 23 roasters that owns the coffee co-op. “It dominates all conversations and sucks the life out of you.”

The White House says if it loses, it will impose tariffs through other means, such as a law that allows the president to set tariffs of up to 15% for 150 days.

Until then, businesses will feel some relief, because those other means require steps like issuing formal notices, which take time and deliberation, said trade attorney Ted Murphy of Sidley Austin.

“It’s not just about money,” he added. “The president announced the tariffs on Sunday that will take effect on Wednesday, without prior notice, and without any real process.”

“I think that’s the biggest thing about this case for businesses, whether that happens in our future or not,” he added.

There is no clear sign of how the court will rule.

In recent years, she has struck down key policies, such as student loan forgiveness under Biden, as White House overreach.

But the nine justices, six of whom were appointed by Republicans, including three appointed by Trump, They have shown deference to this president in other recent conflicts and have historically given the White House leeway on matters of national security.

“I really think the arguments are there for the Supreme Court to go in all different directions,” said Greta Pisch, a partner at Wiley and a former trade lawyer in the Biden administration.

Adam White, a senior fellow at the American Enterprise Institute, said he expected the court to strike down the tariffs, but he sidestepped questions such as what constitutes a national emergency.

The issue has already complicated the White House’s trade agreements, such as the one concluded in July with the European Union.

The European Parliament is currently considering ratifying the agreement that sets US customs duties on European goods at 15% in exchange for promises that include allowing the entry of more American agricultural products.

“They will not act on this until they see the outcome of the Supreme Court decision,” said John Clarke, former director for international trade at the European Commission.

In Switzerland, which recently lowered its economic growth forecasts citing the 39% US tariff on its goods, chocolatier Daniel Bloch said he welcomed the ruling against the Trump administration.

His company, Chocolats Camille Bloch, is absorbing about a third of the cost of new tariffs on kosher chocolate that his company has been exporting to the United States for decades, aiming to limit price hikes and maintain sales. He said that this decision destroyed the unit’s profits and is not sustainable.

He hopes Trump will completely reconsider his tariffs, because “that would be easier.”

He added: “If the court decides to cancel customs duties, of course we will consider that a positive sign.” “But we don’t trust that this will bring a solution.”