When Trade Becomes a Constitutional Crisis

September 24, 2025

This fall the Supreme Court will hear two consolidated cases — V.O.S. Selections, Inc. v. Trump and Learning Resources, Inc. v. Trump — that go to the heart of how the United States governs trade. The question is deceptively simple: when a president imposes tariffs under the International Emergency Economic Powers Act (IEEPA), is he exercising Congress’s taxing authority, or regulating foreign commerce in a way Congress may lawfully delegate?

The answer is not just a constitutional footnote. For companies that import components, manage global supply chains, or commercialize intellectual property across borders, it will determine whether tariff policy can shift with the stroke of a presidential pen.

The Legal Crossroads

Congress enacted IEEPA in 1977, codified at 50 U.S.C. §§ 1701–1707, to give presidents authority to freeze assets and restrict transactions during declared national emergencies. Its text authorizes the President to “regulate … importation” of property or interests subject to U.S. jurisdiction. Historically, presidents used IEEPA to impose targeted sanctions—blocking specific goods, entities, or countries—not to create worldwide tariff regimes.

Tariffs, however, are traditionally viewed as either taxes (Article I, § 8, cl. 1) or commerce regulations (Article I, § 8, cl. 3). Congress has delegated tariff authority before, but through statutes like Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862) or Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411). Those laws provide clear triggers and procedural guardrails. By contrast, Trump’s 2025 “reciprocal tariff” order, imposing a 10% baseline duty on most imports plus higher rates on select countries, rested entirely on IEEPA and a declaration that persistent trade deficits constitute a national emergency.

The Court of International Trade and, on appeal, the Federal Circuit were not persuaded. Both courts concluded that tariffs are duties within the meaning of Article I, and that IEEPA lacks the “intelligible principle” required under J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394 (1928). The Federal Circuit also invoked the “major questions” doctrine, most recently applied in West Virginia v. EPA, 597 U.S. 697 (2022), reasoning that reshaping global trade through tariffs is precisely the kind of measure requiring clear congressional authorization.

The challengers’ position is bolstered by precedents like U.S. v. U.S. Shoe Corp., 523 U.S. 360 (1998), where the Court treated duties as revenue-raising devices subject to constitutional limits, and Panama Refining Co. v. Ryan, 293 U.S. 388 (1935), which struck down a statute granting the executive sweeping economic discretion. Their message is simple: if tariffs are taxes, the President cannot invent them through emergency orders.

The Counterarguments

The government and its allies insist that tariffs are not only about raising revenue; they are regulatory tools of foreign commerce. Two Republican lawmakers, Representatives Darrell Issa and Brian Mast, filed an amicus brief arguing that IEEPA’s power to “regulate importation” plainly authorizes tariff measures, just as Congress uses its commerce power to regulate through tariffs.

The American Center for Law and Justice leans on United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936), where the Court described the President as the “sole organ” of the nation in foreign affairs. From this perspective, limiting the President’s ability to respond quickly to international threats—whether fentanyl trafficking or unfair trade practices—undermines the constitutional framework.

Chad Squitieri, a professor at Catholic University, adds historical texture. He argues that tariffs have always straddled two functions: they can operate as taxes, but also as regulatory levers. Congress therefore need not delegate its taxing power to delegate tariff power; it can rely on its commerce authority instead. By treating tariffs only as taxes, he says, the lower courts misapplied both the nondelegation and major questions doctrines.

Why This Matters for Business and Intellectual Property

For businesses, this is not a theoretical fight. If the Court upholds the tariffs, future presidents could use IEEPA to impose duties on everything from pharmaceuticals to semiconductors to educational toys. That unpredictability complicates sourcing strategies, pricing, and long-term investment.

For IP-intensive industries, tariffs ripple into innovation itself. Pharmaceutical companies may face higher costs on imported active ingredients or research reagents, squeezing R&D budgets. Technology firms may find their global licensing arrangements undermined if the cost of importing chips, sensors, or devices rises overnight. Even consumer goods companies like Learning Resources — itself a plaintiff — risk losing ground to foreign competitors if tariffs inflate input costs without warning.

If, on the other hand, the Court affirms the lower courts, companies may gain greater certainty that sweeping tariff changes require congressional action. That predictability matters for structuring global supply chains, negotiating licensing deals, and projecting costs in patent commercialization. Businesses would still need to track trade legislation, but the rules of the game would not shift unilaterally in the middle of a fiscal year.

The Bigger Picture

This is more than a trade case. It is a referendum on how much economic power Congress can delegate to the President under the banner of “emergency.” A ruling for the administration could expand executive authority well beyond tariffs, inviting broader uses of IEEPA in ways that touch technology transfer, cross-border data flows, or even IP enforcement in foreign markets. A ruling against the administration could mark a rare revival of separation-of-powers limits, reminding us that even in moments of urgency, the Constitution reserves the taxing power to Congress.

For companies that trade globally, manage IP portfolios, or innovate in industries where inputs cross borders daily, this decision will shape not only tariff exposure but the constitutional landscape in which business planning unfolds.