(MENAFN) The US Supreme Court is set to hear arguments on Wednesday in a pivotal case questioning President Donald Trump’s use of emergency powers to impose broad tariffs—a case that could reshape the limits of presidential authority over trade.

A coalition of small businesses and several states argue that numerous tariffs enacted under the International Emergency Economic Powers Act (IEEPA), a 1977 law allowing sanctions in response to “unusual and extraordinary” threats, were illegal and should be struck down.

A ruling in favor of the plaintiffs could require the federal government to refund a portion of the estimated $90 billion in import taxes collected since the tariffs were implemented.

Trump invoked emergency powers in February to target goods from China, Mexico, and Canada, later extending the tariffs in April to cover nearly all trading partners, citing the US trade deficit as a “national emergency.”

In August, Trump warned on his Truth Social platform that overturning the tariffs would “destroy” the US economy. He also announced that he would not attend the court hearing to avoid causing a “distraction,” cautioning that a loss could “weaken” the country and complicate future trade negotiations.

Critics contend that while the IEEPA grants the president authority to regulate trade, it does not permit the imposition of tariffs—an area constitutionally reserved for Congress.

The case follows several lower court decisions. In August, a federal appeals court ruled 7-4 that Trump had exceeded his legal authority. Another ruling on August 29 similarly concluded that the tariffs were enacted without proper congressional approval.

The Supreme Court’s verdict, expected early next year, could have significant consequences for US trade relations with the European Union and other international partners.

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