Small Businesses Challenge Trump’s Tariffs in Federal Court
A legal battle is underway as five small businesses have taken aim at former President Donald Trump’s tariffs, branding them an illegal overreach of presidential power. The businesses have petitioned a federal trade court to halt the tariffs, arguing that they exceed the authority granted to the executive branch. Government lawyers, however, maintain that the imposition of tariffs has been a long-standing practice, dating back to the early days of the nation.
The U.S. Court of International Trade previously denied the businesses’ initial request on April 22 to temporarily suspend the tariffs while the legal proceedings unfold. On May 13, Judges Gary Katzmann, Timothy Reif, and Jane Restani convened in New York to hear arguments concerning the expediency of the case, specifically whether to proceed without gathering additional evidence.
The tariffs in question, implemented by Trump on April 2, imposed a 10% levy on imports from various countries worldwide. Even higher rates were applied to nations with trade surpluses with the U.S., notably China. Trump justified the tariffs as a means of generating substantial revenue while simultaneously incentivizing companies to bolster their manufacturing operations within the United States.
Represented by the Liberty Justice Center, a nonprofit legal organization, the businesses contend that Trump lacks the authority to impose unlimited and unreviewable tariffs of any amount on any country at any time. Jeffrey Schwab, the lawyer representing the businesses, characterized Trump’s "Liberation Day" tariffs as an unprecedented and unlawful expansion of executive power, asserting that it contravenes the intent of Congress.
Eric Hamilton, a Justice Department lawyer, countered that the Supreme Court had already affirmed the president’s authority to impose tariffs in a 1974 case. He argued that courts have historically refrained from reviewing political decisions, such as declarations of national emergencies, similar to the one Trump invoked under the International Emergency Economic Powers Act. Hamilton also noted that the Senate had previously voted against blocking Trump’s tariffs in April.
Hamilton maintained that tariff decisions fall within the purview of the political branches of government, namely Congress and the president.
Judge Jane Restani questioned the legal standard for determining whether tariffs are a legitimate response to an "unusual" or "extraordinary" situation.
"How would the court draw that line?" Restani inquired. "You know it when you see it doesn’t work. Give me some words."
Schwab argued that Trump’s invocation of emergency powers was unjustified, considering that the country had experienced trade deficits for decades.
"I’m asking this court to be an umpire and to call a strike," Schwab stated. "You’re asking me, ‘Where’s the strike zone? Is it at the knees or slightly below the knees?’ I’m saying it’s a wild pitch and it’s on the other side of the batter and it hit the backstop so we don’t need to debate the difference."
Justice Department lawyers asserted that Congress has empowered presidents to conduct foreign affairs and regulate trade, including the imposition of tariffs, since 1794. However, Schwab argued that regulating trade primarily involves inspections, not taxing imports.
Judge Gary Katsmann highlighted that the U.S. Supreme Court had previously upheld identical statutory language in a 1974 ruling that sanctioned former President Richard Nixon’s surcharges on imports when the country abandoned the gold standard.
"Why do you suggest we come to an opposite conclusion when the statutory language is identical?" Katsmann questioned.
Schwab responded that the court should conduct a fresh examination of the issue, given that the law Trump cited to "regulate" international trade was approved after the 1974 ruling.
"The term regulate does not mean the power to tax or tariff," Schwab argued.
Judge Timothy Reif countered that regulation could encompass tariffs.
"Regulate could mean a lot of different things, so could it mean tariffs," Reif said.
The outcome of this legal challenge could have significant implications for the president’s trade policy authority and the balance of power between the executive and legislative branches. The court’s decision will likely be closely scrutinized by businesses, policymakers, and legal scholars alike. The small businesses’ challenge represents a bold attempt to curb what they view as an unchecked expansion of presidential power in the realm of trade. Their arguments resonate with concerns about the potential for tariffs to disrupt supply chains, raise prices for consumers, and harm American businesses.
Conversely, the government’s defense of the tariffs emphasizes the historical precedent for presidential authority in trade matters and the need for flexibility in responding to economic challenges. The Justice Department’s arguments align with the view that tariffs can be a valuable tool for promoting domestic manufacturing, protecting American industries, and addressing unfair trade practices.
The case highlights the ongoing debate about the appropriate role of government in regulating trade and the extent of presidential power in shaping economic policy. The court’s decision will likely have far-reaching consequences for international trade relations and the American economy.
The names of the five small businesses involved in the lawsuit were not disclosed in the article.
