Trump's tariffs run into revenue problem at the Supreme Court

The centerpiece of President Trump's economic agenda might be scrambled because of the billions it has generated for the U.S. government. Why it matters: Trump and his top deputies have touted how they have improved the nation's fiscal position by raising billions from tariff revenue. What's good for the deficit outlook might be a big problem for the policies' constitutionality, however.The big picture: In oral arguments Wednesday, Supreme Court justices — including conservatives on the bench — questioned Trump's authority to unilaterally impose what were effectively taxes.While Congress has delegated powers to the president to deal with foreign policy, Chief Justice John Roberts said "the vehicle is imposition of taxes on Americans, and that has always been the core power of Congress.""It's been suggested that the tariffs are responsible for significant reduction in our deficit. I would say that's raising revenue domestically," Roberts said.Justice Sonia Sotomayor said the law that underpins the lion's share of Trump-imposed tariffs allowed the outright ban of imports. "What it doesn't say is the president can raise revenue," Sotomayor said.The other side: Solicitor General D. John Sauer, who argued on behalf of the government, said that the tariffs' primary purpose was to regulate foreign commerce, borrowing language from the International Emergency Economic Powers Act."These are regulatory tariffs, they are not revenue-raising tariffs. The fact that they raise revenue is only incidental," Sauer said.Sauer returned to this argument before the hearing concluded for the day: "It is clear that these policies are most effective if nobody ever pays the tariff, if it never raises a dime of revenue.""When it comes to the trade deficit emergency, if no one ever pays the tariff, but instead they direct their consumption domestically and spur the rebuilding of our hollowed-out manufacturing base, that directly addresses the crisis," he said.The intrigue: "I think in some ways the solicitor general is hurt by his client," Robert Shapiro, a partner at Thompson Coburn who chairs the international trade practice, tells Axios."His point of 'the tariffs would be most powerful without raising money' is hard when you have the president talking about all the money from the tariffs," says Shapiro.Flashback: During a speech on "Liberation Day," Trump said the tariffs would raise "trillions and trillions of dollars to reduce our taxes and pay down our national debt." Those remarks came before Trump signed orders imposing the global tariffs that now face global scrutiny. The bottom line: The Supreme Court sounded skeptical that Trump could enact such far-reaching tariffs, raising the odds that the highest court could curb at least some of Trump's trade agenda.

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