The Supreme Court is set to decide on the limits of executive power – and that decision will have practical implications for Australia.

The US Supreme Court is preparing to consider a question that goes to the heart of how the international trading system currently functions: can the President of the United States impose tariffs without congressional approval by declaring a national emergency?

The answer will matter not only for the United States, but also for countries such as Australia, which depend on a stable and predictable trading environment.

The legislation at issue is the International Emergency Economic Powers Act (IEEPA) of 1977. The Act was designed to allow a president to restrict or freeze financial transactions and foreign assets in situations of genuine emergency: war, state-sponsored violence, terrorism, and similar threats. Its logic was firmly embedded in national security and foreign policy.

It was never intended to serve as a general tariff instrument. Yet in recent years, IEEPA has been invoked not to freeze assets but to levy import duties, effectively bypassing Congress — the branch of government that the US Constitution explicitly grants authority to “lay and collect duties”.

This raises a constitutional question: whether the use of emergency powers in this way is compatible with the balance of authority between the legislative and executive branches.

Historically, tariffs in the United States were a matter for Congress. The most famous example was the Smoot–Hawley Tariff Act of 1930, which raised American tariffs sharply and contributed to a collapse in world trade during the Great Depression.

In reaction, President Franklin Roosevelt and Secretary of State Cordell Hull sought to reverse the dynamic with the Reciprocal Trade Agreements Act (RTAA) of 1934. Under the RTAA, Congress delegated limited authority to the President — not to increase tariffs, but to negotiate reciprocal reductions. The goal was to expand trade and strengthen international relationships. This approach laid the foundation for the post-war trading system, including the GATT and later the WTO.

Over the decades, Congress granted the Executive additional trade tools: Section 232 for national security tariffs, Section 301 for retaliation against unfair practices, and Section 201 for temporary safeguards. Each contains procedures and evidentiary standards. IEEPA does not. It is an emergency law, and emergency laws, once stretched, rarely contract.

If the Supreme Court rules that IEEPA may be used to impose tariffs, the president would gain extraordinary discretion. Tariffs could be imposed without congressional approval, simply by declaring an emergency. Trade policy would shift toward executive leverage rather than negotiated rules.

If, however, the court determines that IEEPA does not authorise tariff measures, tariff decisions would remain within established legal frameworks. Congress would retain its constitutional role. The trading system would remain somewhat more predictable.

For Australia, the implications are practical. Australia is a middle power whose prosperity depends on rules governing trade that are transparent and stable. Australian exporters — particularly in steel, aluminium, critical minerals, and clean-energy components — rely on predictable market access. The exemption Australia secured from US steel and aluminium tariffs in 2018 demonstrates what is possible through diplomacy, but exemptions are discretionary. They depend on context.

If tariff authority shifts toward unconstrained emergency power, exemptions can shift just as quickly.

The broader issue, therefore, is not simply the level of tariffs but the stability of the system in which decisions are made.

The world is watching a contest not just about tariffs, but about the meaning of emergency authority and the limits of executive power. The Supreme Court’s decision will shape the balance between institutions and discretion.

For Australia, the stakes are clear. We benefit when trade is governed by law — not as an instrument of short-term strategic pressure, but as a foundation for long-term economic stability and cooperation.

The views expressed in this article may or may not reflect those of Pearls and Irritations.