RECAP | U.S. Supreme Court justices question Trump’s sweeping use of tariffs

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It's hard to say how long the court will take to render its decision. It could be months before a ruling is made. For example, in the Dobbs v. Jackson Women's Health Organization case that overturned abortion rights, oral arguments were heard in December 2021; a decision was made the following June.

The Trump administration has petitioned the court to "expedite resolution of this case to the maximum extent feasible," citing the "urgent need for swift resolution."

The court did place the case on a fast track. Its nine-month term began Oct. 6 — and just a month later, it's hearing oral arguments.

As for the decision it may deliver?

Amy Howe, co-founder of SCOTUSblog, says the tone of the justices' questioning suggests that the court will rule against the Trump administration.

"Some of my colleagues in the press room were speculating that it could even be 9-0," Howe said in an interview on C-SPAN. However she said she believes it's "more likely" to be a 6-3 or 7-2 ruling against the tariffs.

One of the key questions for the court is what the president's power to "regulate" imports in the text of IEEPA actually means in practice.

This prompted the lawyers and the justices to use the word regulate dozens of times during the 2-hour, 40-minute-long hearing.

"Figuring out what regulate importation means is obviously central here," Justice Brett Kavanaugh said during the hearing.

Sauer argued that there's a long history of tariffs being used as a way of regulating imports.

"The tariffs are an incentive, a pressure point, leverage, bargaining chip … to get countries to change their behaviour to address the foreign-arising emergencies," Sauer said in his final statement to the court.

"They're clearly regulatory tariffs not taxes…. They are an exercise of the power to regulate foreign commerce."

Congress has used the word "regulate" in legislation nearly 1,500 times, "but it is never used even once to impose taxes or revenue raising," Katyal said during his arguments.

Although this case has implications for a big chunk of Trump's overall tariff regime on more than 100 countries around the world, it will not actually affect the tariffs that currently have the biggest impact on Canada.

The U.S. Tariffs on imports of steel, aluminum, the auto sector and softwood lumber were all imposed using long-established presidential powers to levy tariffs in relation to specific industries.

Those powers are not being tested in this case.

The Canada-specific tariffs at issue before the court today are the first tariffs Trump imposed in the spring, ostensibly in response to cross-border fentanyl trafficking.

Those tariffs, which Trump boosted to 35 per cent this summer, hit a relatively small slice of Canadian exports: goods deemed non-compliant with CUSMA, the Canada-U.S.-Mexico Agreement.

Liberal budget built to address uncertainty as global trade system gets 'rewired': Carney says

Prime Minister Mark Carney was out promoting his government's budget on Wednesday, saying the plan presented in the House on Tuesday will allow Canada to 'build the future we want for ourselves.'

Carney spoke briefly this morning about the effect of U.S. Tariffs on the Canadian economy. His government just tabled its first (and long-awaited) budget yesterday and much of its contents aims to reorient the country away from its dependence on trade with the U.S.

"We presented a clear picture of what's happening to our economy and what's being taken from us," Carney said at a news conference in Ottawa Wednesday morning.

"It's estimated that U.S. Tariffs and the uncertainty that they're creating will cost us around 1.8 per cent of our GDP."

Carney said that translates to "about $50 billion lost from our economy or the equivalent of $1,300 for every Canadian."

The budget — which pegged the country's deficit at $78 billion — aims to prioritize developing industry in Canada through home-building and major projects that enable faster trade routes to Europe and Asia and cash in on natural resources and renewable energy.

A reminder: In August, Trump bumped up tariffs on Canadian goods entering the U.S. From 25 per cent to 35 per cent. Goods are only subject to tariffs if they aren't covered by the existing Canada-U.S.-Mexico Agreement on trade (CUSMA).

The president justified the move by pinning it on Canada's retaliation to U.S. Tariffs and "lack of co-operation" in stopping fentanyl and other drugs from entering the U.S.

Prime Minister Mark Carney says 85 per cent of Canadian goods comply with CUSMA. But that's everything that qualifies, not the actual amount that gets through: some small businesses who ship to the U.S. May not bother to go through the complicated process of getting their goods exempted.

Steel and aluminum tariffs are a punishing 50 per cent. There's also a 25 per cent tariff on cars going to the U.S., levied on the non-U.S. Parts in finished vehicles.

In late September, Trump added a 10 per cent tariff on lumber, and 25 per cent on furniture, kitchen cabinets and bathroom vanities.

Is the Ronald Reagan anti-tariff ad actually ‘fake’?

U.S. President Donald Trump is dropping all trade talks with Canada, he says, because of Ontario’s anti-tariff commercial featuring the voice of former president Ronald Reagan. But were Reagan’s words actually taken out of context as Trump claims?

In her questioning of Gutman, Sotomayor briefly raised the issue of the Ontario government running ads that featured clips of former U.S. President Ronald Reagan speaking negatively about tariffs.

(That ad angered Trump, which led to him breaking off trade talks with Canada.)

“The president threatened to impose a 10 per cent tax on Canada for an ad it ran on tariffs during the World Series,” Sotomayor said.

She also mentioned that Trump had imposed a 40 per cent tax on Brazil because its Supreme Court permitted the prosecution of one of its former presidents for criminal activity.

She said those policies raise the question as to whether a statute, in this case the IEEPA, that gives without limit the power to a president to impose this kind of tax, would also require more than the word "regulate" in it.

"That's your point," she said to Gutman.

"Yes," Gutman agreed.

If the Trump administration loses this case, the government will be on the hook for the billions of dollars it took from U.S. Companies in the form of tariffs.

Back in September, Treasury Secretary Scott Bessent said on NBC's Meet the Press the government would have to refund roughly half of its tariff income if they lose the case.

It's unclear just how this money would be refunded. Some suggest it could be a bureaucratic nightmare.

"The tariffs may not be automatically refunded. It may be a lengthy process. It may be application-based for every single import," David Warrick, EVP at supply chain risk management company Overhaul, recently told Forbes. "We just don't know."

International trade lawyer Ted Murphy told CNN he believes the most likely scenario would be the government asking the court to approve an "administrative refund process," meaning importers would have to "affirmatively request a refund."

Another legal term that keeps getting raised in today’s hearing is the “nondelegation doctrine.”

It’s somewhat similar to another legal concept that has also gotten a lot of attention, the “major questions” doctrine, that says a president can’t take up policies or “questions” that involve major economic and political significance unless explicitly authorized by Congress.

The nondelegation doctrine is the idea that under the constitution Congress cannot delegate its lawmaking powers to other branches of government.

Sauer argued earlier that that doctrine “cast no doubt on IEEPA” because, he argued, Congress may assign the president broad authority regarding the conduct of foreign affairs, and he enjoys his own powers under Article 2 of the constitution.

But the plaintiffs have argued that IEEPA does not give the president such broad authority to apply tariffs, and the nondelegation doctrine reaffirms that Congress can’t delegate such power.

U.S. Solicitor General D. John Sauer has just finished rebutting the arguments we’ve heard from the lawyers representing the two plaintiffs in this case.

In all, there were more than 2½ hours of arguments, with both conservative and liberal justices voicing skeptical questions about the legality of the U.S. President's sweeping tariffs.

The Algonquin Precedent has already been mentioned a couple times in the arguments this morning. It’s a 1976 case heard at the Supreme Court — Algonquin SNG Inc. V. Federal Energy Administration. So what’s it got to do with today?

In 1975, then president Gerald Ford imposed fees on foreign oil imports to encourage national oil consumption and "move toward independence from foreign sources of energy," according to a 1976 New York Times article.

Ford ended the fees, which were being challenged in various courts, but still took the case to SCOTUS after the U.S. Court of Appeals for the District of Columbia ruled that the president had authority to limit imports "only through 'direct' methods, meaning import quotas," according to more New York Times reporting from the time.

But the country's highest court ruled unanimously in his favour, saying the president has authority to bypass Congress's powers to impose fees on imported oil as a way of limiting imports for national security reasons.

In a bit of foreshadowing, the Times wrote that the ruling "has substantial importance, in terms of law and presidential power, for it means that supplemental fees could be imposed again."

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