The world is awaiting a landmark decision by the US Supreme Court on Trump’s tariffs

Perhaps the biggest battle yet in Donald Trump’s trade war is about to begin.

The Trump administration heads to the US Supreme Court on Wednesday, facing off against small businesses and a group of states that say most of the tariffs are illegal and should be overturned.

If the court agrees with them, Trump’s trade strategy would be upended, including the sweeping global tariffs he first announced in April. The government will also likely have to recoup some of the billions of dollars it collected through the tariffs, which are taxes on imports.

The judges’ final decision will come after months of reviewing arguments and discussing the merits of the case. Eventually they will hold a vote.

Trump described the fight in epic terms, warning that a loss would tie his hands in trade negotiations and threaten national security.

On Sunday, the president said he would not attend the hearing in person because he did not want to be a distraction.

“I wanted to go so badly … I just don’t want to do anything to detract from the significance of this decision,” he said. “It’s not about me, it’s about our country.

Trump has previously said that if he does not win the case, the US will be “weakened” and in a “financial mess” for many years to come.

The stakes feel just as high for many businesses in the U.S. and abroad, which are paying the price as they are buffeted by rapidly changing policies.

Trump’s tariffs will cost Learning Resources, a US seller of mostly foreign-made toys and one of the businesses suing the government, $14m (£10.66m) this year. That’s seven times what it spent on tariffs in 2024, according to CEO Rick Woldenberg.

“They’ve thrown our business into an incredible meltdown,” he said, noting that the company has had to move production on hundreds of items since January.

However, few companies count on winning in court.

“We’re hoping it will be outlawed, but we’re all trying to prepare for it as well,” said Bill Harris, co-founder of Georgia-based Cooperative Coffees.

His cooperative, which imports coffee from more than a dozen countries, has already paid roughly $1.3 million in duties since April.

In deciding this case, the Supreme Court will have to take on a broader question: How far does presidential power go?

Legal analysts say it’s hard to predict how the justices will respond, but Trump’s ruling would give him and future White House occupants more leeway.

Specifically, the case concerns tariffs that the Trump administration imposed using the International Emergency Economic Powers Act of 1977 (IEEPA), which the White House embraced because of its speed and flexibility. By declaring a state of emergency under the law, Trump can issue immediate orders and bypass longer established processes.

Trump first invoked the law in February to tax goods from China, Mexico and Canada, saying drug trafficking from those countries constituted an emergency.

He rolled it out again in April, ordering levies ranging from 10% to 50% on goods from almost every country in the world. This time, he said the US trade deficit – where the US imports more than it exports – poses an “extraordinary and unusual threat”.

Those tariffs were held in fits and starts this summer as the US pushed for the countries to make “deals”.

Opponents say the law authorizes the president to regulate trade but never mentions the word “tariffs,” and they argue that only Congress can impose taxes under the U.S. Constitution.

They also disputed whether the issues cited by the White House, particularly the trade deficit, constituted emergencies.

Members of Congress from both parties have said the Constitution also gives them responsibility for creating tariffs, duties and taxes.

More than 200 Democrats in both houses and one Republican, Sen. Lisa Murkowski, appealed to the Supreme Court, where they also argued that the emergency law did not give the president the power to use tariffs as a tool to gain leverage in trade negotiations.

Meanwhile, the Senate last week took a symbolic and bipartisan step to pass three resolutions rejecting Trump’s tariffs, including one to end the emergency he declared. They are not expected to pass the House.

Still, business groups said they hoped the censure would send a message to justice.

Three lower courts have ruled against the administration. After the Supreme Court hears arguments on Wednesday, it will have until June to issue its decision, though most expect a decision by January.

Whatever it decides has an impact on about $90 billion worth of import taxes already paid — roughly half of the tariff revenue collected by the U.S. this year through September, according to Wells Fargo analysts.

Trump officials have warned that the amount could rise to $1 trillion if the lawsuit drags on until June.

If the government is forced to issue refunds, Cooperative Coffees will “absolutely” try to recoup its money, Mr Harris said, but it won’t make up for all the disruption.

His business had to take out an additional line of credit, raise prices and find ways to survive with lower profits.

“It’s a drain on energy like I’ve never seen,” said Mr. Harris, who is also chief financial officer of Cafe Campesino, one of 23 bakeries Cooperative Coffees owns. “It dominates all conversations and just sucks the life out of you.”

The White House says if it loses, it will impose tariffs through other means, such as legislation allowing the president to impose tariffs of up to 15 percent for 150 days.

Even then, businesses will have some relief because these other means require steps such as issuing formal notices that take time and discussion, said commercial lawyer Ted Murphy of Sidley Austin.

“It’s not just about the money,” he said. “The president announced the tariffs on Sunday, which go into effect on Wednesday, with no advance notice, no real process.”

“I think that’s the bigger thing in this case for the business — whether or not it’s going to be in our future,” he added.

There is no clear indication of how the court will rule.

In recent years, he has dismissed major policies, such as Biden-era student loan forgiveness, as White House overreach.

But the nine justices, six of whom were appointed by Republicans, including three by Trump, have shown deference to this president in other recent controversies and have historically given the White House leeway on national security matters.

“I really think there’s a case for the Supreme Court to go in all different directions,” said Greta Paish, a partner at Wiley and a former trade attorney in the Biden administration.

Adam White, a senior fellow at the American Enterprise Institute, said he expected the court to cut the tariffs but avoided questions like what constitutes a national emergency.

The case has already complicated the White House’s trade deals, such as the one struck in July with the European Union.

The European Parliament is currently considering ratifying the agreement, which sets US tariffs on European goods at 15% in exchange for promises including allowing more US agricultural products.

“They will not act on this until they see the outcome of the Supreme Court decision,” said John Clarke, former director of international trade at the European Commission.

In Switzerland, which recently downgraded its economic growth outlook citing America’s 39 percent tariffs on its goods, chocolatier Daniel Block said he would welcome a ruling against the Trump administration.

His business, Chocolats Camille Bloch, is absorbing about a third of the cost of the new duties on kosher chocolate, which his company has exported to the US for decades, as it seeks to stem price increases and support sales. This decision has destroyed profits for the unit and is not sustainable, he said.

He hopes Trump will completely revise his tariffs because “that would be the easiest thing to do.”

“If the court makes the tariffs go away, of course we will see that as a positive sign,” he said. “But we don’t believe that will lead to the solution.”