Small Businesses Challenge Trump’s Tariffs in Court, Citing Presidential Overreach
NEW YORK, May 13 – Five American small businesses are taking legal action against President Donald Trump’s "Liberation Day" tariffs, arguing that the president exceeded his constitutional authority by declaring a national emergency to justify imposing sweeping taxes on imports from nations that maintain a trade surplus with the United States. The businesses contend that Trump’s actions are detrimental to their operations and undermine the stability of the American economy.
A hearing is scheduled for Tuesday before a panel of three judges at the U.S. Court of International Trade in New York. This hearing represents the first significant legal challenge to Trump’s tariff policies, which have sparked considerable controversy and uncertainty within the business community.
The lawsuit was initiated by the nonpartisan Liberty Justice Center, acting on behalf of the five small U.S. businesses directly impacted by the tariffs. These businesses, diverse in their operations, include a New York-based wine and spirits importer and a Virginia-based manufacturer of educational kits and musical instruments. They argue that the "Liberation Day" tariffs, imposed on April 2, are unlawful and severely impede their ability to conduct business effectively.
Jeffrey Schwab, the attorney representing the plaintiffs, emphasized the detrimental effects of the tariffs on small businesses. He highlighted the threat of increased costs and the constant fluctuations that make it impossible for businesses to plan for the future. "Small businesses are being harmed by the threat of increased costs, as well as ‘minute by minute changes’ that prevent them from planning ahead," Schwab stated. "Our clients have no certainty on what the tariffs are going to be at any point, and that’s exactly the problem."
Schwab further argued against the president’s unilateral authority to impose tariffs on any country at any time. "One person shouldn’t have unilateral authority to impose tariffs on every country at any rate, at any time that he wants," he asserted. The Liberty Justice Center’s lawsuit is one of seven legal challenges to Trump’s tariff policies. It is the first to seek a ruling that would prevent the tariffs from taking effect.
The Court of International Trade previously denied the small businesses’ request to temporarily halt the tariffs while the lawsuit proceeded. However, the court quickly scheduled Tuesday’s hearing to determine whether to rule against the tariffs or impose a longer-term suspension. This expedited hearing indicates the court’s recognition of the urgency and significance of the issue.
Trump initially imposed the new tariffs on April 2, citing the U.S. trade deficit as a "national emergency." He justified a 10% across-the-board tariff on all imports, with higher rates for countries with the largest trade deficits, particularly China. These tariffs were intended to address the trade imbalance and incentivize domestic manufacturing.
Subsequently, many of the country-specific tariffs were temporarily suspended. The Trump administration announced it would temporarily reduce the steepest China tariffs while negotiating a long-term trade agreement with Beijing. Both countries agreed to reduce tariffs on each other for at least 90 days. These policy shifts reflect the complexity and fluidity of the Trump administration’s trade strategy.
Trump’s inconsistent tariff policies have caused significant disruption in U.S. markets. Despite the turmoil, he has defended them as a means of revitalizing American manufacturing.
The executive order enacting the tariffs invoked laws such as the International Emergency Economic Powers Act (IEEPA), which grants presidents special powers to address extraordinary threats to the U.S. The Liberty Justice Center argues that IEEPA does not authorize the president to unilaterally impose tariffs "on any country he chooses at any rate he chooses." They contend that the law is intended for "unusual and extraordinary" threats, not long-standing trade imbalances.
The lawsuit asserts that the U.S.’ decades-long trade deficit does not qualify as an emergency that would trigger IEEPA. The plaintiffs maintain that the president’s reliance on IEEPA is an overreach of executive power and a misapplication of the law.
The U.S. Department of Justice (DOJ) has defended the tariffs, arguing that IEEPA grants presidents broad authority to regulate imports in response to a national emergency. The DOJ has requested that the lawsuit be dismissed, claiming that the plaintiffs have not been harmed by tariffs they have not yet paid. The DOJ also argues that only Congress, not private businesses, can challenge a national emergency declared by the President under IEEPA. This legal argument highlights the fundamental constitutional questions at stake in the case.
The outcome of the court hearing could have far-reaching implications for U.S. trade policy and the balance of power between the executive and legislative branches of government. If the court rules in favor of the small businesses, it could significantly curtail the president’s ability to impose tariffs unilaterally. Conversely, if the court upholds the president’s actions, it could solidify the executive branch’s authority over trade policy. The legal challenge underscores the ongoing debate over the role of tariffs in shaping international trade relations and promoting domestic economic interests.
