On May 13, five small businesses will present their case before a U.S. court, urging the judiciary to halt President Donald Trump’s controversial “Liberation Day” tariffs. These businesses argue that Trump exceeded his legal authority when he declared a national emergency to impose tariffs on imports from countries that have a significant trade surplus with the U.S. This marks the first major legal challenge to Trump’s tariffs, and the outcome could have a lasting impact on U.S. trade policy.
The lawsuit, filed by the Liberty Justice Center, a nonpartisan law firm, represents five small American businesses. These range from a wine and spirits importer in New York to a Virginia-based producer of educational kits and musical instruments. The plaintiffs claim that the tariffs, which were imposed on April 2, are not only illegal but also threaten their ability to operate. According to the businesses, the tariffs create unpredictable cost increases, preventing them from effectively planning for the future.
Attorney Jeffrey Schwab, representing the plaintiffs, emphasized that small businesses are being harmed by rising costs and an ongoing uncertainty about tariffs. “The constant threat of price hikes, coupled with unexpected changes to the tariffs, makes it impossible for businesses to plan,” Schwab explained. “Our clients are caught in a situation where they cannot predict the tariff rates, and that’s exactly the problem. One person should not have the unilateral power to impose tariffs at will on any country at any time.”
This lawsuit is one of several legal challenges to Trump’s tariffs. It is, however, the first to seek an injunction to stop the tariffs from being enforced. The U.S. Court of International Trade, which will hear the case, previously rejected the businesses’ request to temporarily pause the tariffs while the legal proceedings are ongoing. However, the court has scheduled a hearing to determine whether it will issue a ruling against the tariffs or impose a more permanent suspension.
Trump’s “Liberation Day” tariffs were introduced on April 2, with the president claiming that the U.S. trade deficit represented a national emergency. The tariffs included a 10% across-the-board tax on imports, with even higher rates for countries with whom the U.S. has the largest trade imbalances—chiefly China. While some of these country-specific tariffs were later suspended, Trump’s administration announced on Monday that it would temporarily reduce tariffs on Chinese goods while working on a longer-term trade deal. The shifting nature of the tariffs has created significant uncertainty in the markets and among businesses.
While the tariffs have shocked U.S. markets, Trump has defended his actions as a way to restore the country’s manufacturing base. The president’s executive order that invoked the tariffs was based on the International Emergency Economic Powers Act (IEEPA), which grants the president broad authority to regulate imports in response to a national emergency. Under the IEEPA, the president can impose tariffs to protect national security or respond to “unusual and extraordinary threats.” However, the Liberty Justice Center argues that the U.S. trade deficit—an issue that has persisted for decades—does not meet the threshold of an “emergency” that justifies the use of such powers.
The lawsuit challenges Trump’s interpretation of the IEEPA, asserting that it does not provide the president with the authority to impose tariffs on any country or at any rate of his choosing. The plaintiffs argue that the law is meant to address actual emergencies, not long-standing economic imbalances like the U.S. trade deficit. The Liberty Justice Center also contends that the president’s actions violate constitutional principles of separation of powers, as the decision to impose tariffs should rest with Congress, not the executive branch.
The U.S. Department of Justice, on the other hand, defends the president’s use of the IEEPA, arguing that the law grants him broad powers to regulate imports in times of national emergency. The DOJ has also argued that the businesses’ lawsuit should be dismissed, claiming that they have not yet paid the tariffs and, therefore, cannot demonstrate harm. Furthermore, the DOJ asserts that only Congress—not private businesses—has the legal standing to challenge a national emergency declared by the president under the IEEPA.
As this legal battle unfolds, the outcome will likely shape the future of U.S. trade policy and executive power. The decision could have far-reaching consequences for small businesses, which are particularly vulnerable to the volatility and uncertainty created by tariff policies. Moreover, the case could set a precedent for future challenges to the president’s tariff authority, potentially limiting the scope of executive powers under the IEEPA. As the hearing approaches, all eyes will be on the U.S. Court of International Trade as it decides whether to issue a ruling that could curtail or uphold Trump’s tariffs.
