President Trump’s “Liberation Day” tariffs faced their most significant legal scrutiny yet Tuesday as a group of small businesses asserted to a three-judge panel that Trump exceeded his authority.
The New York-based U.S. Court of International Trade spent most of Tuesday’s two-hour argument questioning how it could draw a manageable legal standard in adjudicating Trump’s April 2 tariff announcement, which has disrupted financial markets and reshaped global trade flows.
Trump imposed the sweeping tariffs without congressional approval by invoking the International Emergency Economic Powers Act (IEEPA), a 1977 law that authorizes the president to impose necessary economic sanctions during an emergency to combat an “unusual and extraordinary threat.”
A group of five small businesses, represented by the libertarian public-interest firm Liberty Justice Center and George Mason University law professor Ilya Somin, sued by arguing IEEPA does not allow tariffs. Even if it does, Trump’s trade deficit justification is far from an emergency, they assert.
The panel of judges repeatedly pressed the challengers over what line the court could draw to determine when a president’s determination is valid, as the administration argues Trump’s emergency declaration is not reviewable by the courts.
Judge Timothy Reif, a Trump appointee, asked, “Are there judicially manageable standards that the court could apply to determine whether an emergency is unusual and extraordinary?”
“Can I have some words? ‘You know it when you see it’ doesn’t work, so give me some words,” Judge Jane Restani, a Reagan appointee, similarly pressed.
Jeffrey Schwab, who represented the challengers, insisted the court did not need to formulate a precise legal standard. He analogized Trump’s declaration to a baseball pitch far from the strike zone that hits the batter.
“I’m asking this court to be an umpire and call a strike, and you’re asking me where is the strike zone — is it at the knees or below the knees — and I’m saying it’s a wild pitch,” Schwab said.
Fulfilling a campaign promise, Trump last month imposed a baseline 10 percent tariff on imports and higher “reciprocal” tariffs on dozens of specific countries. Days later, he suspended most of the higher rates for 90 days — except for those on China.
The president’s tariffs against China were the steepest, reaching 145 percent on imports. But Monday, Trump announced a de-escalation by issuing a 90-day pause, sending major U.S. stock indices soaring to their highest levels in weeks.
Last month, the three-judge panel declined to temporarily block the tariffs, finding the businesses had not shown they would face irreparable harm in advance of Tuesday’s hearing.
On Tuesday, some of the sharpest skepticism of Trump’s tariffs came from Restani.
At one point, Restani cut off government attorney Eric Hamilton’s defense of the president’s actions, saying “We don’t deal with policy. We deal with law.”
Hamilton said that the president’s order falls squarely within IEEPA’s intended use, noting that its qualifiers — “unusual” and “extraordinary” — mean only “not usual” and going beyond what’s customary. He said trade deficits’ “cumulative effects” on the U.S. economy, not the deficit itself, justified Trump declaring an emergency.
“Over time, we’re now in a situation where the supply chain is threatened,” Hamilton argued.
Restani pushed back at the government’s contention that an emergency can be borne out of a decades-long problem.
“You believe that situations that exist over time can get to a point where they fall off the cliff and become something that can trigger IEEPA?” Restani asked.
“Absolutely,” Hamilton replied.
The judge questioned the limits of such an approach, positing that the president could then declare a national emergency if there’s a nationwide shortage of peanut butter.
“There’s no limit, is what you’re saying — there’s no limit,” Restani said.
The panel also homed in on a 1975 court decision upholding then-President Nixon’s tariffs he imposed under a predecessor law to the IEEPA. The judges repeatedly suggested the language in the new law is materially identical.
“Why should we find differently here?” asked Judge Gary Katzmann, an appointee of former President Obama.
Trump’s “Liberation Day” actions marked a notable departure from the tariffs he imposed during his first term, which targeted specific industries and goods with little impact on the broader U.S. economy.
The sweeping measures sparked fears of imminent trade wars, as countries around the world threatened to impose retaliatory tariffs that would likely increase costs for American businesses and consumers while fracturing the nation’s global standing.
The small businesses’ case is one of several challenging Trump’s various tariffs, but it is the furthest along.
Next Wednesday, the same court will consider an effort by 12 Democratic state attorneys general, led by Oregon, to block all of Trump’s tariffs. Other lawsuits remain ongoing that specifically focus on Trump’s levies for Chinese and Canadian goods.
The businesses at Tuesday’s arguments said that Trump’s imposition of the tariffs marked an “unprecedented and unlawful expansion” of executive power.
“The defendants’ position would allow the president to impose tariffs on any country, at any rate, at any time — simply by declaring a national emergency without meaningful judicial review,” said Schwab. “This is not what Congress intended.”
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