The Supreme Court will soon hear oral argument in Learning Resources v. Trump, three consolidated lawsuits challenging the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). Through a series of executive orders since taking office earlier this year, the President has relied on IEEPA to impose new global tariffs on imported goods from nearly all countries, as well as additional tariffs on goods from Mexico, Canada, and China. The Court will consider whether IEEPA—which allows the President to “regulate … importation” in response to a national emergency—delegates the power to impose tariffs to the President, and if so, whether that delegation violates the separation of powers. The outcome of the case could have enormous impacts on the way the nation raises revenue and redefine the balance of power between Congress and the President.
Much of the briefing before the Supreme Court centers the debate around whether the IEEPA tariffs are an exercise of the Constitution’s taxing power or commerce power. This seems to be the wrong question; after all, as noted by the D.C. Circuit in one of the cases below, “both of those powers belong to Congress, not the President.” The more relevant question is whether Congress, when enacting IEEPA, delegated to the President the authority to raise revenue—whatever the underlying constitutional source of that power.
The history of tariffs and Congress’s deliberate decision to abandon tariffs as a major source of revenue early in the 20th Century helps give context to the language of IEEPA, enacted in 1977, and its predecessor statute, the Trading with the Enemy Act (TWEA), enacted in 1917. As noted by the Federal Circuit in its opinion below and amici curiae before the Supreme Court, tariffs were the primary source of revenue for the nation until ratification of the 16th Amendment in 1913. Following the Revenue Acts of 1913 and 1916 (which reintroduced a federal income tax and slashed tariff rates), and again after the Reciprocal Trade Agreements Act of 1934 (which allowed the President to lower tariff rates as part of foreign trade agreements), tariff revenue plummeted as a share of total revenue and declined as a share of the economy. Over the past 70 years, tariffs have never accounted for much more than 2 percent of total federal revenue, with average effective tariff rates in the single digits.
This shift away from tariffs toward income and payroll taxes marked a deliberate policy choice by Congress, following decades of debate, to embrace a more progressive and more stable method of funding the government, including important new functions like Social Security. The context in which IEEPA was enacted in the 1970s thus demonstrates that the word “regulate” cannot reasonably be read to allow the President to unilaterally and significantly adjust the level and composition of federal revenue, and, as explained in depth by many of the briefs, IEEPA is rather best read as placing additional guardrails on the President’s emergency powers to impose sanctions and embargoes as originally enacted in TWEA.
In stark contrast to these long historical trends, as a result of the IEEPA tariffs, tariff revenue has roughly doubled in recent months as a share of overall federal revenue, and more than doubled in dollar terms. Meanwhile, effective tariff rates have climbed to 18 percent, the highest since 1934. If the IEEPA tariffs endure indefinitely, they are expected to raise trillions of dollars in revenue over the next decade.
Moreover, revenue-raising has been a central justification for the IEEPA tariffs, not just incidental to the President’s other stated goals of reducing trade deficits and drug trafficking. This is consistent with the President’s stated policy goal of using tariffs to replace income taxes. Notwithstanding that it would be impossible to raise enough tariff revenue to fully replace the income tax system, the President has repeatedly called for a return to the Gilded Age era in which the government was fully reliant on tariffs. In particular, a key administration goal in imposing the IEEPA tariffs has been to raise revenue to offset the cost of income tax cuts in the One Big Beautiful Bill Act passed by Congress over the summer. Yet none of those tariffs were taken up or enacted by Congress. Instead, the IEEPA tariffs were imposed unilaterally by the President, claiming that Congress delegated him the power to do so nearly 50 years ago. But considering that Congress abandoned tariffs as a revenue tool long before that, it hardly follows that they delegated that tool to the President through IEEPA.
The Constitution allows for tariffs to be used as a source of revenue to replace (in full or in part) the income tax, and indeed—as noted by tax law professors in their amicus brief tracing the origins of tariff authority and legislation—Congress relied on tariff revenue through the nation’s early history. But the power to do so rests squarely with Congress, and Congress has not passed any law enacting—or even contemplating—indefinite tariffs of varying rates across the world. The power claimed here cannot be overstated when it comes to the nature of the federal tax system and especially in light of the prominent policy debates on this very issue that Congress settled.
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Simply put, Congress did not write IEEPA to allow a President to replace the income tax system with a patchwork of tariffs that they can impose, adjust, or suspend at will. Such major changes to the raising of revenue can only come from Congress, and Congress did not make that choice.
