Analysis by Energy Workforce President Tim Tarpley
The Supreme Court heard oral arguments on November 5th regarding the legality of the President’s IEEPA (reciprocal). At question is whether a President was given sweeping tariff authority by Congress when it passed IEEPA in 1977. IEEPA was intended to give the President the authority to regulate international economic activity during a declared national emergency. The court, with a 6-3 conservative majority and a history of siding with the President, appeared to express some skepticism about the use of IEEPA to cover universal tariffs as applied. Many justices expressed concern that allowing a President to exercise such authority would usurp Congress’s power to impose taxes on Americans to raise revenue. It was argued that a Presidential tariff authority could ultimately become a permanent tax system.
While it was not crystal clear from the questions which way the court would decide or when, it did appear from oral arguments that the court could, in fact, find either all or part of the IEEPA tariffs unconstitutional. It is important to remember, however, that if they rule this way, the ruling would apply only to the IEEPA tariffs and would not affect the steel and aluminum tariffs under section 232. The practical effects of such a ruling could be blunted, though, as the administration could find additional tariff authority in other sections of the law to achieve many of the same outcomes as the IEEPA tariffs do.
One of the biggest questions these oral arguments raised for our companies is what happens to the collected tariff duties if the court ultimately rules that way? Justice Amy Coney Barrett asked several questions of the plaintiff’s lawyer about the practicality of returning such large sums to importers. She expressed concern that this would be incredibly difficult for the government to accomplish. The lawyer explained that this difficulty should not weigh on the decision and also opened the door to the idea that the court could rule that the tariffs collected to date would remain, and that only those going forward would be blocked. The amount of potential revenue that could be refunded is significant. Data released by the US Department of the Treasury indicated that by September 2025, the U.S. had collected more than $213 billion in tariff revenue. However, the President has indicated that he believes the number is much larger. In fact, on Truth Social, the President stated that an “adverse decision could lead to an economic ‘unwind’ exceeding $3 trillion,” arguing that this would be a national security situation.
The President also suggested in a separate Truth Social post that he was considering a dividend of at least $2,000 per person with an exclusion for “high-income” people. While many analysts believe such a plan is unlikely to actually happen, it could complicate much of the Supreme Court case, as the Justices appeared to have the biggest issues with the revenue-raising aspect of the IEEPA tariffs. A 100% tariff refund to the public could potentially diminish this argument, although no similar case study appears to exist, so it would be a novel point of law for the court to address. The ruling could come as late as June; however, many court watchers expect it to be released much earlier, potentially even before the end of the year, given the importance of the case.
Shutdown Wraps Up However, January 30th Expiration Sets up Possibility of Another One Down the Road
On Thursday, the House passed a compromise spending package that ended the longest government shutdown in history. The deal allows a short-term budget extension until the end of January 2026 and a separate vote on the ACA subsidies. The end of this shutdown is a welcome development as the air traffic control system was close to the breaking point. Additionally, the House and Senate committees working on permitting reform have announced that they will move quickly to get the ball rolling again. A markup on the SPEED Act, which is expected to be a vehicle for permitting reform in the House, could be marked up as early as next week. Although the next few months will be dotted with holidays, there should be enough time to move something before government funding again becomes the focus at the end of January. EWTC is working with all relevant committees of jurisdiction to push for a strong permitting reform package that will allow our companies to continue powering the country, supporting our economy and workforce.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
