Madison Monkevich

May 16, 2026

Disclaimer: The objectives of this article are as follows: objectively review the extent of power of the U.S. government branches; showcase the judicial processes of debate over a national issue; and through economic principles, assess different outcomes and their effect on future American governance and society.

Abstract

In early 2025, two separate court cases arose, both aiming to address the constitutionality of the International Emergency Economic Powers Act of 1977 (IEEPA) and President Donald J. Trump’s use of Executive Order 14257 issued April 7th, 2025, concerning the imposition of unprecedented tariffs on imported goods from foreign trading partners [11]. In very brief summation, the plaintiffs claimed these tariffs were beyond the scope of the executive branch’s constitutional enumerations. The two cases were as follows: VOS Selections v. Trump, filed on April 14th, 2025, and Learning Resources v. Trump, filed on April 22nd, 2025. The link between these cases being, despite their file in separate lower courts – VOS Selections v. Trump in the Court of International Trade and Learning Resources v. Trump in the District of Columbia Federal District Court – they both ended up at the U.S. Supreme Court as consolidated appeals, aiming to address the same legal question over if the International Emergency Powers Act, 50 U.S.C. § 1701, was constitutional in authorizing the President to impose such tariffs [7].

Introduction – Part One – Defendant (President)

Executive Order 14257 begins with an explanation of the national emergency President Trump aimed to resolve. In 1934, U.S. Trade Policy was adopted based on the principles of reciprocity [11].  In Trump’s interpretation of this policy, Congress deemed the presidential role to secure reduced reciprocal tariff rates through individual trade agreements with key trading partners, then later negotiate lower rates through broad global trading systems such as the World Trade Organization (WTO) [11]. The policy of “reciprocity” was not effective. According to President Trump, it was built upon incorrect assumptions placing the United States in a state of highly unbalanced trading relationships. This is evident from United Nations data, which found that U.S. global manufacturing output was down 9% – a decrease from 28.4% in 2001 to 17.4% in 2023. Further, evidence of the U.S. worsened economic state can be seen in trends from 1997 to 2024, where over 4 million American manufacturing jobs were lost, one of the “largest drops in manufacturing employment in history,” according to President Trump [11].

In favor of the argument for the declining American economy is that, as of April 7th 2025, manufacturing represented only 11% of U.S. GDP. Manufacturing accounts for 35% of American productivity growth and 60% of American exports, thus only representing 11% of GDP is reflective of the state of decline. Following his reasonings for the state of emergency, Section Two of the order titled Reciprocal Tariff Policy, establishes an ad valorem duty (tax on percentage of a good’s value) on all trading partners starting at 10%, noting these taxes will increase to rates described in Annex I for specific trading partners/countries. Following this, Annex II is a tabular list of specific 8-digit product codes, all subject to the tariff action, and it is in Annex III where President Trump grants U.S. Customs and Border Protection ultimate say on which products fall under these enumerated codes. In implementation of this order, it was the goal of President Trump to amend the United States’ growing trade deficit. 

Introduction – Part Two – Plantiffs (VOS + LR)

To start, VOS Selections v. Trump, April 14th, 2025. It is to be noted this was not solely VOS Selections Inc. as plaintiff, but a collection of the following importer companies, all of which were negatively impacted by President Trump’s tariffs: Plastic Services and Products, LLC d/b/a Genova Pipe; Microkits, LLC; FishUSA Inc.; Terry Precision Cycling LLC. For the purposes of this article, complaints will be given in a general matter (not specified for each LLC/Inc.). The plaintiffs claim the alleged justification from the International Emergency Economic Powers Act (IEEPA), does not authorize the President to issue world-wide tariffs and his claim of a “national emergency” is merely a “figment of his own imagination” [13]. The complaints begin with a fundamental value to which America was founded, the principle of no taxation without representation, which the plaintiffs claim to be violated. The plaintiffs argue it would be an “unlawful delegation of legislative power to the executive” for the President of the United States to authorize immediate tariffs on imported goods with no public feedback or congressional oversight [15].

 The proposed rates on individual countries set forth in Annex II were derived from a “simple ratio of the trade deficit in goods (excluding services) as a percentage of total U.S. imports from the given country” [13]. The plaintiffs’ arguments claim the chosen formula for calculating such trade barriers has no basis in economic theory and is thus unacceptable justification for the tariffs imposed. Subsequently, IEEPA 50 U.S.C. § 1702, sections A and B are explained and the word “tariff” itself does not appear in the IEEPA or any word of equal value. Additionally, authorities may only enact the IEEPA with a great deal of an extraordinary threat “with respect to which a national emergency has been declared” [12]. Yet the President’s claimed “national emergency” was illegitimate, as the trade deficits he cites are not unusual or unexpected. According to economist Norbert Michel, global trade deficits cannot even be described as a problem necessarily, it merely represents foreign countries selling things Americans want to buy [5]. To conclude, the two counts of VOS Selections argument are as follows: Count I, this tariff action oversteps the President’s statutory authority. Count II,  if the IEEPA does grant the President this right, it is an unconstitutional delegation of legislative authority [13].

Learning Resources Inc. and hand2mind Inc. filed against President Trump’s Executive Order 14257 on April 22nd, 2025. The primary complaint of their cases concerned the unprecedented tariffs on imported goods from China, as both of these companies were outsourcing their manufacturing from China. As a result of Executive Order 14257, the rates for Chinese goods are described to be over 140%, increasing the businesses import costs from 2.3 million to over 100 million dollars with implementation of this order [7]. Similar to VOS Selections, Learning Resources’ complaints were over the legality of the IEEPA tariffs, and claimed the IEEPA did not delegate the President the power to impose such tariffs. On May 29th, 2025 the United States District Court for the District of Columbia granted the preliminary injunction that the IEEPA would not authorize the President to impose these tariffs; however, the ruling was stayed days later and sent to the Appellate Court of the District of Columbia. Here petition for certiorari (for the Supreme Court to review the case), was filed June 17th, 2025 and denied June 20th, 2025 [4].

As VOS Selections v. Trump continued to work its way through the courts system, they petitioned for certiorari on September 3rd, 2025, being granted it on September 9th, 2025, in a compilation of consolidated cases concerning similar issues over the IEEPA, this including Learning Resources v. Trump [15]. Thus, on November 5th, 2025 the issues described in these two cases, among the consolidated others, were heard in the Supreme Court. There were two major legal questions that remained eminent, paralleling the two counts of the VOS argument. The questions being, was the President constitutionally allowed to impose these broad tariffs under the IEEPA, and if so, was this act an unconstitutional delegation of legislative power?

Understanding the IEEPA

Before delving any further, a solid understanding of the IEEPA is imperative as we evaluate its role in government policy. The International Emergency Economic Powers Act (IEEPA) was enacted in 1977 with the purpose of providing the President of the United States broad authority to regulate different economic aspects of society in a state of national emergency [2]. This act stemmed as an addition to the Trading With the Enemy Act (TWEA) of 1917, which was enacted following the U.S.’s entry into World War One, as a means for regulation of international transactions with enemy powers. Addition of the clause to expand the President’s power over domestic and international transactions if the country was declared to be in a state of national emergency was added in 1930. Throughout the Cold War (1947-1991), Presidents used the TWEA in many cases to regulate international transactions. In August 1971, President Nixon, proposed an economic program that increased import surcharges to 10% across the board, citing authority under the TWEA of 1917.

In a similar fashion to the present day case against the IEEPA, the case of Yoshida v. United States (1975) was tried in lower courts, arguing against Nixon’s ability to impose such a tariff constitutionally, and ruled against the imposed tariffs. However, the lower court’s decision was later overturned and Nixon’s tariff was found to be constitutional because the word “regulate” used in Section 5(b) of TWEA, would grant the President the power to impose this tax. However, the clause was given that each presidential action “must be evaluated on its own facts and circumstances” [16]. Thus, precedent would play no role in President Trump’s case, as each presidential instance would be subject to its own specific circumstances. After Nixon’s case, came the passage of the IEEPA in 1977, creating new limits on the President’s power in a state of national emergency, becoming an important means to impose economic based sanctions from its enactment [2]. With a further understanding of the IEEPA, its enactment can seem unclear and be interpreted differently, especially without precedence. This was part of the reason, it took the Supreme Court a large amount of time to issue their ruling.

Economics’ Role In Politics

Coase Theorem, as described in Economics Analysis of Law, suggests “the doctrines and institutions of the legal system are best understood…as…to promote the efficient allocation of resources,” [9] which is one of the most fundamental issues studied in economics. Coase Theorem proves the legal consequence of a court ruling at this level, isn’t just a political issue but indeed an economic one. When the President is granted the constitutional power to invoke tariffs abruptly in a declaration of a national emergency, this increases the degree of uncertainty in the American market. This is one of the principle claims in VOS Selections, the national emergency was subject to the President’s views and not the objective state of the economy. According to economists Dixit and Pindyck, their approach to economic investment states, “investment is encouraged by a stable environment; greater uncertainty increases the…value of waiting and discourages investment” [3]. Thus, through retention of the power to increase tariffs by the President, this will potentially decrease business’ investment and expansion in the market and could lead to decreasing American economic growth long term. It is commonplace knowledge, one is more likely to make a bet they believe they are sure to win, with the state of the American economy being one subject to a higher degree of uncertainty may reduce the necessary risks and or “bets” businesses need to make to grow.

Douglass North, a renowned American economist, who won the Nobel Prize in 1993,  expands on the inner workings of institutional power and the economy in his Prize Lecture. North emphasized the idea that our political institutions are the “underlying determinant of economic performance” [6]. Similar to Coarse, and similarly to Dixit and Pindyck, North describes our institutions (executive branch) as our rules of the game and business organizations of the players [6]. Further corroborating the idea that if a business can’t reasonably predict what may happen in the market, it will discourage their overall desire to innovate. It’s the fundamental idea: no one wants to play a game to which they don’t know the rules, and with the enactment of the IEEPA as it stands in the present day, businesses will claim they don’t know the rules. The definition of what constitutes a “National Economic Crisis” is too vague and will discourage economic innovation as a whole. Ironically, one of the key goals of Executive Order 14257, was to increase domestic innovation to restore the U.S. global prominence; however, with the outrage of businesses and the questionable constitutionality of the IEEPA itself, the nation’s economic problem will not begin to be solved before the political one, showcasing the true interconnected nature of economics and law.

These principles harm businesses in the economy, but they also directly harm the everyday consumer. This is reflected in the idea of Cost-Push Inflation, which states that prices will become higher for a consumer in the market when there are, “higher costs of production and higher costs of raw materials” [8]. An immediate tariff on imports, especially as big as the ones in the Executive Order, would cause an inward shift in the short-run aggregate supply, as the cost of production increases beyond what businesses were prepared for (including the idea there was no preparation period cited by VOS). Now, it is true that the idea of Cost-Push Inflation is characterized as a short-term issue that should correct itself over time; however, it still causes “a fall in living standards” in addition to higher prices for consumers all around [8]. This shows the impact of this policy in regards to everyday American lives.

If the economy is stabilized, this stems the question, what factors arise as the most prevalent toward driving the American economy when this is the case?

Argued by Nobel Prize winning economist Paul Romer in 2018, Romer describes the most important driver of economic success is information. In his Endogenous Growth theory, he writes “in the language of public finance, ordinary goods are rival goods, but information is nonrival” [10].  Major advancements are made by focusing on the education of individuals in the economic sector. Additionally, Romers deduced five basic facts of economic growth theorists, he mentions technological development is “a function of elapsed calendar time” [10]. herefore, in a market with lower supply chain uncertainty and reduced geopolitical shock, instead of the availability and pricing of capital, the most important driver of economic growth becomes an economy’s people themselves. In a stable economy where businesses feel safe, they will likely experiment with more research and when more people are searching, more discoveries are found [10]. Thus, one of the most important factors to arise in a stabilized economy, will be increased research initiatives.

As businesses feel secure enough to explore research and new ideas, one of the biggest drivers of the economy can be described by technological paradigm shifts. As seen in the past, some of the major shifts that led to economic revolutions were the printing press (1440) or the steam engine (1712). Fast forward to today’s economic climate, the biggest technological innovation driving growth in production and the workplace is the integration of Artificial Intelligence (AI). The focus on technological change and integration becomes refined as the political climate remains calm. This idea was first introduced with Douglass North, but is corroborated by economist Darn Acemoglu in his 2025 publication with James A. Robinson. The two describe the framework of institutions and culture as it pertains to economics, writing “the constraints on their connections determine how fluid a culture is…this can have important effects on the nature and evolution of cultural configurations” [1]. In essence, Acemoglu reveals that without proper cultural constraints, including proper political constraints, economic insecurity will follow. It is through advancing economic security, where businesses will venture into innovation and growth, that remain the crucial aspects of a flourishing economy.

Hearing

On February 20th, 2026, the Supreme Court released their ruling in the case of Learning Resources Inc. v. Trump. The majority held the IEEPA did not authorize the President to impose tariffs unilaterally during a declared national emergency. This was determined through analysis of the exact words in the IEEPA, which are described to give the President the power to “investigate, block… regulate …importation or exportation;” however, this does not specifically specify the power of the President to issue taxes [4]. The Supreme Court cites Article I, Section 8, of the Constitution in which it clarifies “the Congress shall have power to lay and collect taxes, duties, imposts and excises,” and that the President is not granted this power under the Constitution [4]. Chief Justice Roberts describes the situation as violating the “executive-legislative collaboration over trade policy with unchecked Presidential policymaking” [4]. Thus, the state of the American economy, as it pertains to tariff policy, remains protected by the checks and balances in the Constitution that limit the President’s executive power. 

Conclusion

The ultimate goal of this review was to analyze the interconnectivity of executive power with trade policy, as it affects the United States economy. This article was meant to highlight the mere existence of this debate and bring light to the malleable nature of the United States’ future economic policies. Economics as a discipline can often be described as a very gray area to research, with most economic theories based on observable trends in market behavior as opposed to concrete facts. As the fundamentals of economics are formed in this way, it is not a science in which one can necessarily conduct experiments. Thus, economic policy is one that continues to evolve as time passes. Every discipline is based on interpretation, and with a constantly changing world, comes constantly changing interpretations. In this way, the study of economics marries well with the study of law, as both disciplines require constant re-evaluation as time progresses.

Sources

[1]: Acemoglu, Daron, and James A. Robinson. “Culture, Institutions and Social Equilibria: A Framework.” Working paper, August 7, 2024. https://economics.mit.edu/sites/default/files/2024-08/Culture%2C%20Institutions%20and%20Social%20Equilibria%20-%20A%20Framework.pdf

[2]: Casey, Christopher A., Jennifer K. Elsea, and Liana W. Rosen. The International Emergency Economic Powers Act: Origins, Evolution, and Use. CRS Report, R45618. Washington, DC: Congressional Research Service, August 29, 2025. https://www.congress.gov/crs-product/R45618.

[3]: Dixit, K. Avinash, Pindyck S. Robert. Review of [Book Title], by Princeton University Press. The Economic Journal 106, no. 438 (1996): [page range]. Accessed February 16, 2026. https://www.jstor.org/stable/2235588.

[4]: Learning Resources, Inc. v. Trump. Slip opinion, No. 24–1287, Supreme Court of the United States, decided February 20, 2026. https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf.

[5]: Michel, Norbert. Trade and Investment Are Not a Balancing Act. Policy Analysis, no. 964. Washington, DC: Cato Institute, November 9, 2023. https://www.cato.org/policy-analysis/trade-investment-are-not-balancing-act.

[6]: North, Douglass C. “Economic Performance through Time.” Nobel Prize Lecture, December 9, 1993. NobelPrize.org. Accessed February 16, 2026. https://www.nobelprize.org/prizes/economic-sciences/1993/north/lecture/.

[7]: Oyez. “Learning Resources, Inc. v. Trump.” Accessed February 12, 2026. https://www.oyez.org/cases/2025/24-1287.

[8]: Pettinger, Tejvan. “Cost-Push Inflation.” Economics Help (blog). July 19, 2022. Accessed February 16, 2026. https://www.economicshelp.org/blog/2006/economics/cost-push-inflation-2/.

[9]: Posner, Richard A. Economic Analysis of Law. 8th ed. New York: Aspen Publishers, 2011. Accessed February 16, 2026. https://cdn.oujdalibrary.com/books/637/637-economic-analysis-of-law-%28www.tawcer.com%29.pdf.

[10]: Romer, Paul M. “The Origins of Endogenous Growth.” Journal of Economic Perspectives 8, no. 1 (Winter 1994): 3–22. https://doi.org/10.1257/jep.8.1.3.

[11]:Trump, Donald J. Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits. Executive Order 14257. April 2, 2025. https://www.federalregister.gov/documents/2025/04/07/2025-06063/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and.

[12]:United States. International Emergency Economic Powers Act. 50 U.S.C. § 1701(a).

[13]: United States Supreme Court. Donald J. Trump, President of the United States, et al. v. V.O.S. Selections, Inc., et al. No. 25-250. Docketed September 4, 2025. https://www.supremecourt.gov/docket/docketfiles/html/public/25-250.html.

[14]: United States Supreme Court. Learning Resources, Inc., et al. v. Donald J. Trump, President of the United States, et al. No. 24-1287. Petition filed June 17, 2025. https://www.supremecourt.gov/docket/docketfiles/html/public/24-1287.html?

[15]: WorldTradeLaw.net. V.O.S. Selections, Inc. v. Trump Complaint. Accessed February 12, 2026. https://www.worldtradelaw.net/document.php?id=tradedisputetracker%2Fvos-selections-ieepa-complaint.pdf.

[16]: Zirpoli, Christopher T. Legal Authority for the President to Impose Tariffs Under the International Emergency Economic Powers Act (IEEPA). CRS Legal Sidebar LSB11281. Washington, DC: Congressional Research Service, April 7, 2025. https://www.congress.gov/crs_external_products/LSB/PDF/LSB11281/LSB11281.1.pdf.