What to Know About the Lawsuits Challenging Trump’s Tariffs

A court blocked Trump’s tariffs on the basis that he exceeded what Congress allows under law.

President Donald Trump in the Oval Office at the White House on June 5, 2025. Anna Moneymaker/Getty Images

President Donald Trump’s tariffs are at the center of a legal battle after a federal trade court recently held that they were illegal.

A Supreme Court decision could even be in the works after two toy companies asked for the high court’s intervention in their challenge to the tariffs.

In April, the president invoked an emergency powers law to impose 10 percent baseline tariffs on all trading partners and higher reciprocal tariffs on certain countries.

At issue is whether the emergency law authorized Trump to issue these sweeping levies.

The Constitution gives Congress the power to impose tariffs. However, it has long delegated that authority, or said that presidents can do so on their own, with certain limitations under law.

Here’s what to know about the questions in this legal dispute.

What is the Emergency Law?

Under the International Emergency Economic Powers Act, the president may declare a national emergency to deal with any “unusual and extraordinary threat” to the country’s national security, foreign policy, or economy.

The law gives the president broad powers to respond to a declared emergency, including regulating or prohibiting imports.

In February, Trump became the first president to invoke the act to impose tariffs since the law’s enactment in 1977. Presidents have typically used the law to impose sanctions.

In announcing tariffs on Mexico, Canada, and China, Trump declared emergencies over illegal immigration at the southern and northern borders, and the flood of drugs, especially fentanyl, being smuggled into the United States.

Trump later used the law to impose his broader tariffs.

He invoked an emergency over large and persistent U.S. trade deficits caused by decades of unfair trade practices by other countries, in the form of tariffs and non-tariff barriers.

The persistent trade imbalance has threatened the national and economic security, Trump’s executive order states, by hollowing out the country’s manufacturing capacity, undermining critical supply chains, and causing the defense industry to be dependent on foreign adversaries.

The president has since paused some higher reciprocal tariffs, but left the 10 percent baseline levies, as he negotiates trade deals with foreign partners.

Historical Precedent

Although Trump was the first president to use the 1977 law to impose tariffs, President Richard Nixon used an identical provision in a predecessor law, the Trading with the Enemy Act, in 1971 to declare a trade emergency and issue 10 percent tariffs on all imports.

Nixon imposed the tariffs to deal with inflation and trade deficits, and as a “lever” to force Japan and West Germany to revalue their currencies.

After Japanese company Yoshida International sued, courts ruled that Nixon’s actions were legal.

The U.S. Court of Customs and Patent Appeals found that the tariffs “had a direct effect on our nation’s balance of trade and, in turn, on its balance of payments deficit and its international monetary reserves,” and thus “bore an eminently reasonable relationship to the emergency confronted.”

But there were concerns, such as those from Rep. John Bingham, Chair of the House International Relations Committee’s Subcommittee on Economic Policy, who said the ruling might give the president “dictatorial powers that he could have used without any restraint by the Congress.”

Congress later reformed the Trading with the Enemy Act, passing the International Emergency Economic Powers Act in 1977 to limit the emergency powers granted under the Trading With the Enemy Act.

It requires the president to publicly declare the nature of the emergency and to report to Congress when taking steps to address it.

It also allows Congress to “terminate” the emergency status if both chambers issue a joint resolution.

Lawsuits

In May, the Court of International Trade heard arguments in cases brought by small businesses and a group of states against Trump’s tariffs.

Opponents of the tariffs have based their argument on Article I of the U.S. Constitution, which gives Congress the power to “lay and collect Taxes, Duties, Imposts and Excises.”

They note that Congress has delegated the power to impose tariffs to past presidents, but those were subject to congressional approval, procedure, and time limitations.

They allege Trump has followed none of these protocols.

Their suits argued that the emergency act didn’t allow the president to impose tariffs. Nor, they said, were trade deficits an emergency that allowed him to invoke the law.

One lawsuit argued that Trump’s “claimed emergency is a figment of his own imagination.”

It added that “trade deficits, which have persisted for decades without causing economic harm, are not an emergency.”

During a hearing on May 13, an attorney for small businesses suing Trump said that the president was overextending his authority.

The administration’s position, attorney Jeffrey Schwab said, “Would allow the president to impose tariffs on any country at any rate, any time, simply by declaring a national emergency, without meaningful judicial review.”

The Trump administration had argued that the law’s phrasing allows the president to impose tariffs. More specifically, it pointed to language in the law about the president regulating imports.

The administration also said courts were unable to review the president’s invocation of an emergency.

Instead, the Justice Department has said that “whether a threat is unusual or extraordinary is reviewable only by Congress, not by the courts.”

In a court briefing supporting Trump’s tariffs, America First Legal Foundation said his use of the emergency act is legitimate, and Nixon’s Yoshida case is “binding precedent” to back up its claim.

Federal Court Ruling

A three-judge panel on the court sided with the states and the small businesses in a decision at the end of May.

The judges’ opinion focused on the extent of Trump’s tariffs and the balance of power between the executive and legislative branches.

In its decision, the court said the law didn’t authorize the president to impose “unlimited tariffs” and said his second set of tariffs lacked “any identifiable limits.”

If Congress were to delegate its power in a way that allowed unlimited tariffs, that would be “an improper abdication of legislative power,” the judges said.

At the hearing, Judge Jane Restani asked both Schwab and Justice Department attorney Eric Hamilton questions, getting at this issue.

At one point, she asked whether the president could declare an emergency based on a national shortage of peanut butter.

“What you’re saying is there’s no limit,” she said, prompting a denial from Hamilton.

To the Appeals Court and Beyond

Trump quickly appealed the decision to the U.S. Court of Appeals for the Federal Circuit, which temporarily halted the Court of International Trade’s decision, allowing the tariffs to continue.

One of the plaintiffs, an Illinois toy company, has asked the Supreme Court to take up the case on an expedited basis, before the appeals court issues a ruling.

In a court petition, the plaintiffs ask for a “swift and conclusive resolution” to the tariff question in order to avoid economic damage that would occur while the appeals process plays out.

In the meantime, Trump has announced a trade deal with the United Kingdom.