The case served as a check on the most far-reaching claims of executive power at the time and signaled the Court's increased willingness to intervene in political questions.

Though the steelworkers supported the move, the steel companies launched a legal challenge to the seizure on the grounds that the president lacked the power to seize private property without express authorization from Congress.

In his majority opinion, Associate Justice Hugo Black held that the president lacked the power to seize the steel mills in the absence of statutory authority conferred on him by Congress.

In his dissent, Chief Justice Fred Vinson argued that the president's action was necessary to preserve the status quo so that Congress could act in the future.

Unable to mediate the differences between the union and the industry, Truman decided to seize production facilities while he kept the current operating management of the companies in place to run the plants under federal direction.

The steelworkers favored government seizure of the plants under any available theory to a Taft–Hartley injunction against it; Arthur Goldberg, General Counsel for the Steelworkers and the Congress of Industrial Organizations (CIO), argued that the President had the inherent power to seize the plants as well as the statutory authority under the Selective Service Act and the Defense Production Act.

The steel industry, on the other hand, appears to have been taken by surprise, as it had apparently assumed, until shortly before Truman made his April 8, 1952 announcement, that he would take the less risky step of seeking a national emergency injunction under the Taft–Hartley Act instead.

The steel companies reacted immediately by sending attorneys to the home of Judge Walter M. Bastian of the D.C. District Court within 30 minutes of the end of the President's speech to ask for the issuance of a temporary restraining order.

The steel companies appeared to be shying away from that issue by focusing on the equities and asking the Court merely to enjoin the federal government from entering a collective bargaining agreement with the Steelworkers.

Asked by Judge Pine for the source of the President's authority, he offered, "Sections 1, 2 and 3 of Article II of the Constitution and whatever inherent, implied or residual powers may flow therefrom."

The talks made rapid progress and might have produced an agreement, but the announcement that the Supreme Court had granted certiorari and issued a stay that allowed the government to maintain possession of the steel mills but, coupled with an order barring any increase in wages during the pendency of the appeal, had removed any incentive for the steel companies to reach agreement on a new contract with the union.

The steel industry's brief focused instead on the lack of statutory authority for this seizure and emphasized Congress's decision, when it had enacted the Taft–Hartley Act, to give the President the power to seek an injunction against strikes that might affect the national economy instead.

Before an overflow crowd, John W. Davis argued for the steel companies that the President had no powers to make laws or, more particularly, to seize property without Congressional authorization.

He explained away his own actions when he had defended the government's seizure of property while he had been US Solicitor General in Woodrow Wilson's administration and urged the justices to look beyond the transitory labor dispute before them to the constitutional principles at stake, closing with Thomas Jefferson's words, slightly misquoted: "In questions of power let no more be said of confidence in man but bind him down from mischief by the chains of the Constitution".

Justice Jackson took pains to distinguish the facts concerning the seizure of the North American Aviation Company in 1941, which he had overseen as Attorney General at the time.

In the oral presentation of his opinion, he went out of his way to make a sarcastic reference to the contrary positions that Jackson and Clark had taken when they were the Attorneys General for Franklin Roosevelt and Truman, respectively.

However, he mocked arguments based on the Constitution's provision that allowed the President to recommend legislation, rather than make it himself, as "the messenger-boy concept of the Office".

Within minutes of the Court's ruling, Truman ordered Commerce Secretary Charles Sawyer to return the steel mills to their owners; he did so immediately.

The decision still has had a broad impact by representing a check on the most extreme claims of executive power at the time and the Court's assertion of its own role in intervening in political questions.

The Court later did so in Baker v. Carr (1962) and Powell v. McCormack (1969) and also applied the Frankfurter-Jackson approach to analyzing Congress' legislative authorization of presidential action in invalidating efforts by the Nixon administration to plant wiretaps without prior judicial approval, and it cited the case more generally in support of its decision to permit litigation against the president to proceed in Clinton v. Jones (1997).

The Supreme Court also relied on Youngstown in Medellín v. Texas (2008), in which President George W. Bush had pressured the state of Texas to review the murder conviction of a Mexican citizen, who had tortured and raped two teenage girls in 1993, by arguing that a 2004 decision by the International Court of Justice (ICJ) required law enforcement authorities to tell the accused of his right under the Vienna Convention to notify Mexican diplomats of his detention.