Supreme Court Justices Question Trump Administration on Tariffs

SPEAKER_1 (0:00)

Why do over 50% of the Fortune 500 use Elastic? Because of Search AI. Search AI is what's the next chatting one on one with your business. It's also LG CNS turning real time context into real smart cities. Find out what Elastic can do for your business at elastic.co. Search AI.

Alex Ossola (0:23)

The Supreme Court hears a case that will decide the future of President Trump's tariffs.

John Roberts (0:28)

The vehicle is in position of taxes on Americans, and that has always been the core power of Congress.

Alex Ossola (0:35)

Plus, the president's response to Democrat election victories and the filibuster. And France moves to suspend Sheehan's website after discovering childlike sex dolls for sale on its platform. It's Wednesday, November 5th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today. In a breaking news update, the Federal Aviation Administration says it's ordering airline traffic to be reduced by 10% in 40 locations, while air traffic controllers work without pay during the government shutdown. See more at wsj.com.

The US. Supreme Court this morning heard arguments on one of the most consequential economic and political cases to come before it in decades. The nine justices are weighing whether the president's sweeping global tariffs under the International Emergency Economic Powers Act without congressional approval are lawful, as well as tariffs on Canada, China and Mexico related to fentanyl. The challengers, a group of small businesses and states, say he exceeded his legal powers. Lower courts have agreed, and now it's up to the Supreme Court to decide the fate of a cornerstone of the president's agenda. During the hearing today, justices on both sides of the court's ideological divide expressed skepticism about President Trump's authority to set the tariffs. This is Chief Justice John Roberts.

John Roberts (1:59)

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 seems to me to kind of at least neutralize between the two powers, the executive power and the legislative power.

Alex Ossola (2:24)

WSJ Supreme Court correspondent Jess Bravin told us more about the justice's responses.

Jess Bravin (2:29)

Today's argument really seemed like a route for the Trump administration, from the Chief Justice to the newest justice, Justice Jackson. We saw a lot of skepticism about the basic claim, that the president can impose these worldwide tariffs because this emergency economic law from the 70s allows him to regulate foreign financial transactions in an emergency. The justices just didn't buy the idea that that word carries in it the power to impose tariffs because tariffs are a tax. They're a tax paid by Americans to buy products that are imported from overseas. Taxes are the basic power that Congress has. Remember, taxation without representation way back when, in 1776 Most of the justices were very skeptical of the Trump administration position. Some though, of course, did have serious questions for the challengers. The most notable was Justice Samuel Alito, who kept trying to raise various hypotheticals and various arguments that might be used to justify the Trump administration's position. But even he was skeptical of some of the administration's claims.

Alex Ossola (3:32)

Trump has called the case, quote, literally life or death for our country. A decision upholding President Trump's authority would legitimize the use of tariffs as a cudgel to resolve trade and non-economic disputes alike and could give the president broad authority to regulate the US economy without the involvement of Congress in any circumstance where he finds an emergency exists. But if the court overturns the tariffs, the Trump administration has warned it will need to repay tens of billions of dollars it has already collected. It would also undercut a core legal justification for a large chunk of Trump's tariffs and potentially remove leverage in trade talks.

In a positive sign for the labor market, the payroll processing company ADP said today that American businesses added 42,000 jobs in October after two months of declines. Data from private sources like ADP have become more important as the government shutdown disrupts the usual stream of economic data releases. And US markets rebounded today after yesterday's sell-off. The three major indexes each rose less than 1 percent, with the NASDAQ leading the gains. We're exclusively reporting that OpenAI says it's not working towards an IPO for now. Speaking at the Wall Street Journal's TechLive conference, OpenAI CFO Sarah Fryer said the AI giant's conversion to a new structure does not mean an IPO is imminent, and that OpenAI is prioritizing growth and research and development over profitability.