The United States Supreme Court has begun hearings on the legality of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) by former President Donald Trump, a case that could have significant implications for transatlantic trade. A ruling is expected before the end of the year.
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The tariffs, justified by Trump as a response to emergencies, have never before been invoked under IEEPA, although commentators note a historical parallel with President Richard Nixon's 1971 temporary 10% tariff under the act's predecessor, the Trading with the Enemy Act. Trump's approach was challenged in May when the US Court of International Trade ruled that he had exceeded his authority.
ING economists note that the Supreme Court's decision will influence the balance of power between Congress and the presidency. "Currently, the court has a ratio of six conservatives to three liberals, with three justices appointed by President Trump himself," the report observes. "At the same time, upholding Trump's tariffs would shift the balance of power from Congress to the President, further enhancing his executive power."
Businesses have expressed concern over the uncertainty created by these tariffs, with delays reported in both capital expenditure and consumer spending. A partial ruling against the tariffs could halt IEEPA-based collections and require refunds, adding pressure to public finances. Tariff revenues have been estimated to bring an additional $110 billion in 2025.
"Since the introduction of the new tariffs, revenue from customs has improved significantly and is estimated to have brought an additional $110bn in government revenues this year. However, a ruling would not affect all of these additional revenues," the analysis notes.
Even if the Court rules against IEEPA-based tariffs, sectoral tariffs, particularly in pharmaceuticals, chemicals, and automotive, would likely remain, meaning Europe could continue to face trade pressures. ING concludes: "No matter how the Supreme Court's ruling eventually looks, tariffs are here to stay."
Carsten Brzeski, Global Head of Macro at ING, and Julian Geib, Junior Economist, emphasise that the ruling will be closely watched by European policymakers and businesses alike as they assess potential impacts on exports, investment, and economic stability.
More information:
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