Two US small businesses file lawsuit against Trump's new 10-12.5% tariffs on 60 nations, claiming Section 301 overreach

The lawsuit

Two small businesses, Burlap and Barrel (a New York-based spice retailer) and Collective Horology (a California watch seller), filed a lawsuit on Friday in the US Court of International Trade. They are represented by the Liberty Justice Center, a nonprofit legal group that has successfully challenged President Trump's tariffs multiple times during his second term. The suit targets tariffs that took effect just hours earlier, covering more than 60 countries with duties of 10% and 12.5%. The plaintiffs argue the administration misused Section 301 of the Trade Act of 1974 to recreate a system of duties that judges had already ruled illegal.

The tariffs

The new levies were imposed under Section 301, a provision historically used to combat unfair or discriminatory economic practices by specific nations. The administration cited allegations that trading partners were not doing enough to stop the export of goods produced with forced labor. The tariffs apply to a broad range of countries, including Canada, Mexico, and the 27 members of the European Union. They replaced a temporary 10% global tariff that had expired. Unlike earlier tariff actions that relied on novel interpretations of federal law, Section 301 is considered settled policy and has been used regularly by past presidents. Trump's first-term use of Section 301 to impose duties on Chinese goods survived several court challenges.

Legal arguments

The plaintiffs contend that Section 301 requires detailed, country-specific investigations before tariffs can be imposed. They point to the way the administration conducted its investigations and the fact that it planned to impose tariffs even before its reviews concluded. The lawsuit argues that the broad-brush approach has no historical precedent and that the president is attempting to re-impose tariffs that courts have already struck down. The Supreme Court ruled on February 20 that the International Emergency Economic Powers Act does not authorize the president to unilaterally impose tariffs. A trade court later invalidated a temporary global tariff imposed under a different legal authority, a ruling the administration is appealing.

Previous court victories

The Liberty Justice Center has been central to the legal pushback against Trump's tariff agenda. In February, its lawyers joined state officials in persuading the Supreme Court that the president's original country-by-country duties violated the Constitution by usurping tariff powers reserved for Congress. In the spring, the group succeeded in having the temporary replacement tariff struck down by the trade court. Those victories established that the president cannot impose broad tariffs without clear congressional authorization, setting the stage for the current challenge.

What's next

The new lawsuit adds another front in the battle over presidential tariff authority. If the court sides with the small businesses, it could further constrain the administration's ability to wage a trade war through executive action. The case is likely to move through the federal courts, potentially reaching the Supreme Court again. The administration is already appealing the earlier trade court ruling on the temporary tariff, meaning multiple legal tracks are now in motion.