On Wednesday, the Supreme Court is set to hear arguments on whether President Donald Trump can use emergency powers to levy tariffs. A series of lower courts have ruled against the president.

The hearing focuses on two cases the Supreme Court consolidated. They were brought by a group of states and businesses that say they are being hurt by President Trump’s tariffs.

Henrietta Treyz, co-founder of the consulting firm Veda Partners, said one lead plaintiff is an Illinois toy company that brought its case, “because the tariffs are punitive and have materially hurt their business to the point of making them borderline bankrupt.”

The company, Learning Resources, said it will pay $100 million in import taxes this year. Up from around $2 million last year. President Trump imposed these tariffs under the International Emergency Economic Powers Act of 1977, or IEEPA.

“There’s a long list of actions that a president can take under IEEPA. That list does not include the word ‘tariffs,’” said Elizabeth Goitein, an attorney at the Brennan Center for Justice, which filed a friend of the court brief in support of Learning Resources.

Another plaintiff argument? Tariffs are taxes. Only Congress has the power to tax, and it didn’t specifically delegate that power to the president. 

Alden Abbott was general counsel for the Federal Trade Commission in the first Trump administration and is now at the Mercatus Center. He said the Trump administration is arguing that IEEPA gives the president broad emergency powers. And that the U.S. trade imbalance is an emergency because “the trade deficits have national security implications.”

The president’s lawyers also say IEEPA lets the president regulate trade. And tariffs are part of that, even if the law doesn’t specifically mention them.

Abbot said the administration’s strongest argument is probably that Congress and the courts should keep their noses out of foreign affairs.  

“They say any president has broad authority to try and advance his or her foreign affairs agenda in a broad manner. And that certainly should include tariffs,” he said.

Abbott said Learning Resources and the other plaintiffs have a strong case. But it’s not insurmountable.