Wine Importer Takes Fight to U.S. Supreme Court Against White House Regulations

A wine importer, along with other small businesses, faced off against President Trump at the Supreme Court on November 5, contesting the legality of tariffs imposed on imports from nearly every foreign nation. Legal experts noted that many justices appeared skeptical of the administration’s rationale for the tariffs, but the final ruling may take weeks or even months.

The oral arguments involved two key cases: Donald J. Trump, et al. v. V.O.S. Selections, Inc., et al. and Learning Resources, Inc., et al. v. Donald J. Trump, et al. V.O.S. Selections, a New York City wine importer, and Learning Resources, which produces educational toys, contested the President’s ability to unilaterally impose tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977. This law gives the executive branch considerable leeway to regulate economic transactions during declared national emergencies, but does not explicitly authorize tariffs.

For over two hours, the justices heard from D. John Sauer, solicitor general for the Trump administration, and from Neal Katyal, representing the plaintiffs, along with Oregon’s solicitor general, Benjamin Gutman, supporting the states challenging the tariffs. The justices probed the extent of the president’s powers.

Constitutional Arguments Against the Tariffs

Katyal initiated his argument by emphasizing that "tariffs are taxes," a power that the Constitution grants exclusively to Congress. When importers pay tariffs at customs, they effectively impose additional costs on consumers domestically. According to Article One of the Constitution, only Congress has the authority to impose taxes and tariffs.

While Congress has delegated tariff authority to the president, it typically requires that an investigation be conducted to justify such tariffs, as seen when President Trump enacted tariffs on foreign steel and aluminum. However, when he imposed widespread tariffs earlier this year, citing national emergency claims due to trade deficits and issues like fentanyl entry from Canada and Mexico, he relied on IEEPA instead. The plaintiffs argue that since IEEPA does not mention tariffs or taxes, the president exceeded his authority.

Several justices echoed the plaintiffs’ concerns. Justice Sonia Sotomayor pointed out that the power to tax is constitutionally reserved for Congress, asserting that any costs to citizens should originate from legislative procedures. Additionally, Justice Neil Gorsuch raised issues about the historical implications of a president holding onto such power, suggesting that it could undermine Congress’s authority.

Government’s Defense

In response to the justices’ skepticism, Sauer argued that the administration’s tariffs should not be classified as taxes but as a means of foreign regulation. He stated that presidents traditionally have been granted extensive powers in foreign policy, and that IEEPA supports measures during international emergencies. Sauer contended that the revenue generated by tariffs is incidental.

Justices Brett Kavanaugh and Samuel Alito appeared more inclined to support the administration’s view, questioning why the president would have the power to restrict trade without being able to impose tariffs. The White House positioned the trade deficit as a national emergency, claiming that if the tariffs were overturned, it could result in economic downturns.

Chief Justice John Roberts noted that utilizing IEEPA to impose taxes on American citizens deviates from established congressional authority over taxation.

Future Implications

The Court typically takes months to deliver judgments, but hints of an expedited decision have surfaced. Predicting outcomes from the justices is precarious. While some, including Roberts and Gorsuch, expressed doubts about the privacy administration’s arguments, precedent could influence their rulings.

Should the tariffs be nullified, relief for importers and wine consumers would be immediate. Many in the wine industry have absorbed costs from these tariffs thus far, but the sustainability of this approach is uncertain. A ruling against the tariffs could result in refunds for collected duties.

If the tariffs are struck down, the administration may seek alternate routes, such as invoking the Trade Act of 1974 to implement a temporary global tariff or launching fresh trade investigations under regulations that allow broad tariffs based on trade practices after preliminary inquiries.

For further details on the implications of these tariffs, visit Wine Spectator’s coverage.

About the Author: Chris Lehoux

Meet Chris Lehoux, an experienced wine connoisseur and dedicated blogger with a deep passion for all things wine-related. With years of expertise in the industry, Chris shares insightful wine reviews, valuable wine tasting tips, expert pairing advice, and captivating tales of vineyard visits. Join Chris on a journey through the world of wine, where every sip is an adventure waiting to be savored!