For President Donald Trump, tariffs were never just about trade.

The president has spent several months wielding the threat of massive tariffs to negotiate peace deals, influence countries’ domestic politics and pressure foreign leaders to tighten their borders.

The Supreme Court seems poised to take at least some of that power away.

The mood inside the Trump administration following the arguments Wednesday is “grim,” according to two people close to the White House, granted anonymity to share details of private conversations. The court hearing comes at a difficult time for the administration, which is reeling from the GOP’s electoral defeat that the president tied to a record-breaking shutdown while his allies fault him for not talking more about economic concerns.

During oral arguments, several high court justices appeared skeptical of Trump’s sweeping use of the International Emergency Economic Powers Act, a 1977 law the president invoked to slap tariffs on nearly every U.S. trading partner without consulting Congress. Even a partial ruling against Trump, upholding his ability to levy tariffs in some circumstances and not others, would be a huge blow to a president who has made tariffs not only the centerpiece of his second-term economic platform but crucial to his foreign policy strategy as well.

He’s tied his ability to levy tariffs at a moment’s notice to peace efforts, like between India and Pakistan. It is also a political weapon he wielded most recently to punish Canada for a television ad he didn’t like. Losing the ability to economically cripple another country on a whim would fundamentally change how Trump interacts with friends and foes alike.

“He needs to be able to have the authority to say, ‘I’m going to use tariffs in this particular negotiation to accomplish this national objective.’ If you take away his IEEPA authority, you’re really hamstringing his ability to be forward leaning,” said Alex Gray who served as National Security Council chief of staff and deputy assistant to the president during the first Trump administration. “And not just Donald Trump. Every future president, regardless of party, you’re hamstringing their ability to be nimble and flexible and reactive on the world stage.”

In fact, it was a central point that Solicitor General D. John Sauer, arguing on behalf of the Trump administration, made before the Supreme Court. Without the ability to use the emergency law to impose tariffs at a moment’s notice, he argued, the president’s foreign policy and national security agenda would be significantly hamstrung, pointing to the president’s agreement with China last week as the latest example.

“The tariffs are an incentive, a pressure point, leverage, bargaining chip — as the court said in Dames & Moore — to get countries to change their behavior to address the foreign arising emergencies,” Sauer said. “If the threat of imposing those tariffs gets China and our other trading partners across the world to change their behaviors in a way that addresses this, then that’s the most effective use of the policy.”

Among those listening to the back and forth in the packed courtroom Wednesday were at least three of Trump’s top aides, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, who have vigorously defended the emergency tariffs as crucial to the president’s constitutional authority to conduct foreign policy.

Bessent, speaking to reporters at the White House Wednesday afternoon, struck a sunny tone about how the hearing had gone.

“I think it went very well. I think the solicitor general made a very powerful case for the need for the president to have the IEEPA power,” Bessent said. “And I believe the other side, in a way, fell flat on their face.”

The White House did not immediately respond to a request for comment.

Several justices appeared highly skeptical that Congress intended to delegate such broad power to the president, which they pointed out would most likely take a veto-proof majority to claw back. And they questioned whether it was even constitutional for Congress to hand over such authority to the president — a notable line of argument as the Trump administration has repeatedly pushed the boundaries of its legal authority.

“What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce — for that matter, declare war — to the president?” said Justice Neil Gorsuch, who appeared more hostile to the administration’s arguments during the hearing than initially anticipated. “Congress decides tomorrow, well, we’re tired of this legislating business. We’re just going to hand it all off to the president. What would stop Congress from doing that?”

A former senior Trump administration official, also granted anonymity to speak candidly, said that Congress has “jealously guarded its tariff authority” and that it would be “astounding to find that this breadth of authority now lies with the president with little ability of Congress to recapture it except through a veto-proof majority.”

With a ruling in the case not expected until early next year, Trump will for now be able to continue to use the emergency law broadly. If the justices uphold his use of the emergency law, Trump will almost certainly take it as a green light to keep using tariffs as a multipurpose weapon. But if the court clips Trump’s authority, White House aides expect a scramble to rebuild his tariff regime under narrower laws that don’t offer the same level of reach or speed than the 1977 law does.

Even loyalists acknowledge those fallback options would slow Trump, with many of them requiring months-long investigations to be completed before the president can impose tariffs.

White House press secretary Karoline Leavitt alluded to the administration’s backup plan during a Tuesday briefing, saying that aides “are always preparing for a Plan B” even as they “remain optimistic that the Supreme Court is going to do the right thing.”

“Look at what President Trump has been able to do with the leverage and the power of tariffs. He’s been able to sign peace deals all over the world and end global conflicts and save lives,” Leavitt said. “This case is not just about President Trump. It’s about the use of this emergency authorization for tariffs for future presidents and administrations to come.”

Josh Gerstein and Ben Johansen contributed to this report.