Group of US small business owners sue Trump over tariffs

A lawsuit by a group of five small business owners against the Trump administration will be heard by a major US court on Thursday, in what could be a major challenge to US President Donald Trump’s extensive tariff agenda of the past few months.

The US court of appeals for the federal circuit – an appellate court that hears cases related to international trade and sits one level beneath the US Supreme Court – will hear oral arguments for VOS selections v Trump, in which the businesses accuse the administration of misusing a 50 year-old emergency powers law to justify tariffs without the constitutionally mandated approval of Congress. 

The court brief alleges the President has been using the statute to “impose tariffs on the American people whenever he wants, at whatever level he wants, against whatever countries and products he wants, and for as long as he wants – merely by declaring longstanding US trade deficits a national ‘emergency’”. If the challenge was upheld, Trump’s wide-ranging tariff regime, which includes levies of up to 50% on major industries like cars and metals and threats of high tariffs on the US’s main trading partners, could be put in jeopardy. 

To enact tariffs immediately and without congressional approval, Trump has been using the International Emergency Economic Powers Act, a 1977 law intended to limit presidential powers during national emergencies. The IEEPA lets the president single-handedly regulate transactions with foreign countries “to deal with any unusual and extraordinary threat […] to the national security, foreign policy, or economy of the United States” during a national emergency. 

The Act has been mostly used to impose sanctions on states and non-state actors, most famously by ex-President George W Bush to block assets of terrorist organisations in the wake of the 9/11 attacks. The suit alleges that Trump’s extensive use of the IEEPA to quickly enact a range of tariffs on specific industries and non-hostile foreign countries – many of them, like Canada and the UK, longtime US allies – is unprecedented and unlawful. If this argument is accepted by the courts, a wide range of the President’s actions on tariffs, from trade deals to letters recently sent to foreign leaders threatening increasing tariffs, could become invalid. 

The group bringing the suit is composed of five small businesses in different industries, from spirits to electronics, all of whom import some or all of their raw materials from abroad and say they would be devastated by the tariffs, which make it “nearly impossible to plan, price, or grow,” as one plaintiff told Time magazine. 

Given its high profile and wide-ranging implications, it is likely that the case won’t be decided this week but will be heard by the Supreme Court, which is in session until October. The Supreme Court currently has a 6-3 conservative supermajority, which has historically sided with the sitting administration on major issues; however, if the Supreme Court declines to hear the case, the more Democrat-leaning lower court’s decision would stand. 

If the challenge was upheld, it could invalidate not only Trump’s current and threatened tariffs against individual countries and industries – the bulk of which are set to come into effect on Friday – but potentially also put in jeopardy the trade deals the administration recently signed with the UK, EU, and Japan, among others. Binding trade agreements and treaties usually require Congressional approval; the Republicans hold a strong majority in Congress, but the rising unpopularity of the tariffs may make turning them into law more difficult. 

While the challenge is unlikely to have an immediate effect – similar cases have recently been unsuccessful, and cases like this one can take months to be processed by the courts – it shows the intense disapproval of the tariffs by many US businesses. A lack of clarity on the lawfulness of the tariffs could further raise global economic uncertainty, which had recently waned thanks to the many trade deals announced in the past weeks.