How a Cold War Sanctions Law Could Become a Tool for Domestic Control – JURIST – Commentary

The author argues that if the Supreme Court upholds Trump’s use of IEEPA to impose tariffs, it will transform a foreign-facing sanctions statute into a tool any president could wield against American citizens, businesses, and potentially, political opponents…

On November 5, 2025, the US Supreme Court heard oral arguments in Learning Resources Inc. v. Trump and Trump v. V.O.S. Selections Inc., two consolidated cases challenging President Donald Trump’s “Liberation Day” tariffs imposed on China, Mexico, Canada, and others. The plaintiffs argue, and the lower courts agreed, that the president’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs was unlawful.

The lower courts held that these so-called “IEEPA tariffs” were, in reality, a tax on American importers. Taxation is a constitutional power belonging to Congress unless Congress expressly delegates it, and IEEPA is not one of those delegations. It is a sanctions statute, aimed at foreign individuals, foreign governments, foreign territories, and foreign-controlled property. Nothing in its design or history suggests it can be used to impose financial burdens on American companies moving American-owned goods.

During oral argument, government lawyers leaned heavily on a single phrase in IEEPA — “regulate importation” — arguing that this includes the power to impose tariffs on imports. The liberal Justices [1] pushed back immediately, noting that Trump’s tariffs function as taxes on Americans, and the government did not dispute the point.

Even several conservative justices [2] expressed doubt. They reminded the government that raising revenue for the US Treasury is Congress’s responsibility under Article I. And once the power to impose taxes under IEEPA slips from Congress to the president, they warned, Congress may never get it back. Once that taxation genie is out of that Article I bottle, it’s not going back.

Still, some conservative justices floated theories that hinted at a willingness to salvage President Trump’s program. A few pointed to IEEPA’s “licensing” authority and suggested Congress may have envisioned licensing fees. The Solicitor General for Oregon corrected them: IEEPA licenses exist to create exceptions to embargoes, not to generate revenue.

Other Justices invoked President Richard Nixon’s 1971 tariffs as evidence of historical presidential tariff authority. But those actions pre-dated IEEPA. And after that experience, Congress reacted by writing more specific statutes — Section 232 of the Trade Expansion Act, and Section 301, Section 122 of the Trade Act of 1974 — all of which delegate tariff power with explicit limits. IEEPA contains none of those guardrails.

By the end of the argument, a few conservative justices floated yet another idea: perhaps tariffs were permissible under IEEPA so long as generating revenue wasn’t the president’s “primary intent,” even if billions still flowed into the Treasury.

Key Takeaways

Many observers left convinced the Court would strike down Trump’s use of IEEPA. I did not. Instead, I heard a Court struggling to find a rationale — any rationale — to uphold the president’s actions. When the conservative justices started hypothesizing about presidents charging fees at national parks and generating revenues, it became clear how far some were willing to stretch IEEPA.

The Court also discussed the broad deference presidents receive when declaring national threats. I agree that deference is warranted. Presidents see intelligence the public and judiciary never will. But deference is not unlimited, and turning a foreign-facing sanctions law into a tool for taxing Americans for the sake of “national security” is unnecessary. There are other tax-tariff laws that a president can use.

Why Treating IEEPA’s Sanctions Power as a Tariff Power Is Dangerous

Tariffs and sanctions are not interchangeable. Sanctions under IEEPA have always been foreign-facing. Domestic effects appear only when a US person voluntarily engages with a designated foreign actor or sanctioned country. Domestic harm is secondary, rare, and avoidable.

Trump’s 2025 tariffs flip that design completely.

For the first time in IEEPA’s history, US persons (i.e., US importers of record) are the primary target of the economic burden. American importers pay the penalty. Any impact on foreign nations is incidental. If the Court upholds this use of IEEPA, it effectively rewrites the statute into a presidential power to impose financial obligations on Americans by Executive Order.

What Happens If the “Foreign-Facing” IEEPA Becomes Primarily Domestically Focused?

If the Court endorses this theory, Presidents will no longer need Congress to impose revenue-generating measures. IEEPA is a statute designed to allow presidents to address foreign national security threats using economic strangleholds as the primary means. It affords presidents a high degree of nimbleness, minimal oversight, and far-reaching authority.

But what happens if the same rapid-fire-far-reaching-no-oversight authority is used against domestic players? Any president, not just the current one, would only need to designate a domestic actor as a “foreign-influenced threat” to trigger the apparatus of IEEPA. Under IEEPA’s Section 1702, such a designation triggers sweeping consequences, including asset freezes, bank compliance obligations, reporting requirements, civil and criminal penalties, employer notices, and tax burdens (should the Supreme Court rule in the Trump Administration’s favor). IEEPA’s mechanisms were built to cut off terrorism financing, not for domestic targets. But if allowed by the Supreme Court, these consequences could be directed to domestic players and possibly solely for politically-motivated purposes.

A single Executive Order targeting a US person or US group that alleges a foreign-linked threat activates the entire IEEPA apparatus. Banks freeze assets. Employers receive OFAC alerts (perhaps to garnish an IEEPA individualized tax?). Everyday transactions are interrupted because of the person’s designated status.

Now, throw a political motivation into the mix: What happens to judges whose rulings defy the Trump Administration? What happens to governors who resist federal directives? What happens to political opponents or other vocal critics? Simply put, any American could find themselves trapped in an IEEPA national security web that was never intended to ensnare them. And who within the three branches of government could restrain this use of the IEEPA once allowed? No one.

Conclusion

The Supreme Court now faces a defining question: Will IEEPA remain what Congress wrote – an external-facing tool for confronting foreign threats, or will the Court create a precedent allowing the statute to operate primarily against Americans?

This case is about more than just cheap imports from China. It is about whether we allow a foreign-facing emergency statute to be transformed into a domestic taxing authority. The consequences will extend far beyond trade policy and stand to fundamentally redefine the limits of presidential power.

Notes:

[1] Justices Sonia Sotomayor (appointed by President Barack Obama), Ketanji Brown Jackson (appointed by President Joe Biden), and Elena Kagan (Obama)

[2] Chief Justice John Roberts (appointed by President George W. Bush), Justices Samuel Alito (Bush), Amy Coney Barrett (appointed by President Donald Trump), Neil Gorsuch (Trump), Brett Kavanaugh (Trump), and Clarence Thomas (appointed by President George H.W. Bush).

Nadine Jones is an attorney living in Jersey City with over 20 years of legal practice, including serving as General Counsel to a multi-billion dollar US-based logistics company. She is currently in the consulting space.