By Dietrich Knauth
NEW YORK (Reuters) -Five American small businesses will ask a U.S. court on Tuesday to halt President Donald Trump’s “Liberation Day” tariffs, arguing the president overstepped his authority by declaring a national emergency to impose across-the-board taxes on imports from nations that sell more to the U.S. than they buy.
Tuesday’s hearing before a panel of three judges at the New York-based U.S. Court of International Trade will be the first major legal test of Trump’s tariffs.
The lawsuit was filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the tariffs.
The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, say the steep “Liberation Day” tariffs that Trump imposed on April 2 are illegal and will hurt their ability to do business.
Small businesses are being harmed by the threat of increased costs, as well as “minute by minute changes” that prevent them from planning ahead, said Jeffrey Schwab, an attorney representing the plaintiffs.
“Our clients have no certainty on what the tariffs are going to be at any point, and that’s exactly the problem,” Schwab said. “One person shouldn’t have unilateral authority to impose tariffs on every country at any rate, at any time that he wants.”
The Liberty Justice Center’s lawsuit is one of seven court challenges to Trump’s tariff policies, and it is the first to seek a ruling that would stop the tariffs from moving forward.
The Court of International Trade previously rejected the small businesses’ request to temporarily pause the tariffs while their lawsuit went forward, but then quickly scheduled Tuesday’s court hearing to decide whether to rule against the tariffs or impose a longer-term pause.
Trump imposed the new tariffs on April 2, saying the U.S. trade deficit was a “national emergency” that justified a 10% across-the-board tariff on all imports, with higher tariff rates for countries with which the U.S. has the largest trade deficits, particularly China.
Many of those country-specific tariffs were paused a week later, and on Monday the Trump administration said it was also temporarily slashing the steepest China tariffs while working on a longer-term trade deal with Beijing. Both countries agreed over the weekend to cut tariffs on each other for at least 90 days.
Trump’s on-and-off-again tariffs have shocked U.S. markets, but he has justified them as a way to restore America’s manufacturing capability.
The president’s executive order announcing the tariffs invoked laws including the International Emergency Economic Powers Act, which gives presidents special powers to combat unusual or extraordinary threats to the U.S.
The Liberty Justice Center said the law does not give the president the authority to unilaterally impose tariffs “on any country he chooses at any rate he chooses.”
The law is meant to address “unusual and extraordinary” threats, and the U.S.’ decades-long practice of buying more goods than it exports does not qualify as an emergency that would trigger IEEPA, according to the lawsuit.
The U.S. Department of Justice has argued that IEEPA gives presidents broad authority to regulate imports in response to a national emergency. It has said that the plaintiffs’ lawsuit should be thrown out, because they have not been harmed by tariffs they have not yet paid, and because only Congress, and not private businesses, can challenge a national emergency declared by the President under IEEPA.
The DOJ did not immediately respond to a request for comment Monday.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and David Gregorio)
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