Supreme Court Chief Justice John Roberts grilled Trump Solicitor General John Sauer on Wednesday over the administration’s claim that tariffs are not taxes. Sauer is arguing against lower court rulings that shot down President Donald Trump’s use of emergency powers under the International Emergency Economic Powers Act (IEEPA) to levy sweeping tariffs on foreign countries – a power solely granted to Congress in the Constitution.
Roberts questioned Sauer and noted Congress’s “core power” of regulating taxes, clearly rejecting his argument that Trump’s tariffs aren’t taxes.
“But I mean, and I think this is a question for the other side as well: it’s two-facing. Yes, of course, there are dealings with foreign powers, but the vehicle is imposition of taxes on Americans, and that has always been the core power of Congress. So to have the president’s foreign affairs power trump that basic power for Congress—it seems to me to at least neutralize between the two powers, the executive power and the legislative power,” Roberts said to Sauer, who replied:
Let me say two things in response to that. First, the notion that the taxes are all borne by Americans and not by foreign producers whose goods are imported—empirically, there’s no basis for that in the record. It’s actually a mix.
“But, who pays the tariffs? If a tariff is imposed on automobiles, who pays them?” Roberts interjected.
“Typically, regardless of who the importer of record is, there’d be a contract that would go along the line of transfer that would allocate the tariff. And there’d be different—sometimes the foreign producer would pay them, sometimes the importers would bear the cost. The importer could be an American, could be a foreign company. A lot of times, it’s a wholly owned American subsidiary of a foreign corporation. So it gets allocated. The empirical estimates range from like 30% to 80% of how much is borne by the maker,” Sauer replied.
Roberts hit back, “It’s been suggested that the tariffs are responsible for significant reduction in our deficit. I would say that’s raising revenue domestically.”
“There certainly is an incidental and collateral effect to the tariffs that they do raise revenue, but it’s very important that they are regulatory tariffs, not revenue-raising tariffs,” Sauer replied, adding:
And the way you can see this, I think—if you look at this policy, this policy is by far the most effective if nobody ever pays the tariffs. I say two policies, right? So if you looked at the trade deficit emergency, if nobody ever pays the tariff and instead Americans direct their consumption towards American producers and stimulate the rebuilding of our hollowed-out manufacturing base, then the policy is by far the most effective.
Justice Sonia Sotomayor then jumped in and asked, “So why not– why not do what the statute permits: bar importation of products altogether. That would be the most effective way to do it. You follow the statute, the statute says the President can do that. What it doesn’t say is the president could raise revenue.”
Watch above via CNN.
