Burlap and Barrel, Inc. and Basic Fun, Inc. v. Trump

On March 9, 2026, the Liberty Justice Center filed a lawsuit in the U.S. Court of International Trade challenging the administration’s attempt to reimpose broad global tariffs under Section 122 of the Trade Act of 1974, following the Supreme Court’s landmark decision striking down the prior tariff regime imposed under the International Emergency Economic Powers Act (IEEPA).

On May 7, 2026, the U.S. Court of International Trade ruled in favor of the Liberty Justice Center’s clients holding that the administration’s attempt to use Section 122 as a sweeping tariff authority exceeded the limited authority Congress granted. The government appealed, and the case is now pending before the U.S. Court of Appeals for the Federal Circuit.

• Section 122 applies only to specified international-payments problems. Congress authorized temporary import restrictions to address large and serious balance-of-payments deficits, imminent and significant depreciation of the dollar, or similar international-payments problems—not ordinary or longstanding trade deficits.
• The statutory conditions required to invoke Section 122 did not exist. A persistent trade deficit is not the same as the serious international-payments problem Congress described, and the administration did not establish that the United States faced the type of crisis necessary to trigger Section 122.
• The tariffs exceeded the limits Congress imposed. Section 122 is a narrow and temporary authority subject to specific conditions and limits; it is not a general power to impose sweeping tariffs on nearly all imports from around the world.
• The administration’s interpretation would violate the constitutional separation of powers. The Constitution assigns the power to impose tariffs and taxes to Congress, and the administration cannot transform a limited statutory delegation into an open-ended worldwide taxing authority.

After the Supreme Court held that IEEPA does not authorize the President to impose tariffs, the administration announced a new plan: a global tariff beginning at 10 percent imposed under Section 122, justified as a response to alleged “fundamental international payments problems” and “large and serious United States balance‑of‑payments deficits.”

But the United States was not facing such a crisis. Section 122 was designed to address short‑term, balance‑of‑payments emergencies in a fixed‑exchange‑rate world—not to impose sweeping tariffs on nearly all imports based on long-standing trade deficits. The Court of International Trade agreed that Section 122 cannot be stretched into a general-purpose tariff power.

More fundamentally, the Constitution gives Congress—not the President—the power to impose tariffs and taxes. The Supreme Court reemphasized this principle in V.O.S. Selections, Inc. v. Trump, holding that the President cannot rely on broad statutory language to claim sweeping tariff authority that Congress never clearly granted.

By attempting to stretch Section 122 into a catch‑all tariff power, the administration again sought to bypass Congress and placed the burden of unlawful tariffs on American small businesses and consumers. The Court of International Trade’s ruling in the Section 122 case is an important step toward stopping that unconstitutional end-run around Congress.

Why this case matters

This case raises a fundamental question about who has the authority to impose tariffs on the American people.

Under the Constitution, the power to impose taxes and tariffs belongs to Congress. That principle ensures that major economic decisions affecting American businesses and consumers are made by elected representatives and subject to democratic accountability. Presidents may act only within the limits Congress has clearly set.

Section 122 of the Trade Act of 1974 provides the President with narrow, temporary authority to respond to genuine international payments emergencies, such as a serious balance-of-payments crisis. But the United States did not face such emergency when the challenged tariffs were imposed. By attempting to reinterpret Section 122 as a broad tariff authority based on long-standing trade deficits, the administration asserted the power to impose sweeping taxes on nearly all imports without congressional approval.

If that interpretation were accepted, it would dramatically expand presidential power over trade policy and allow future presidents of either party to impose tariffs across the entire economy simply by redefining ordinary economic conditions as a “crisis.”

This case seeks to prevent that outcome. The Court of International Trade’s ruling did exactly what the Constitution requires: it enforced the limits Congress placed on the President and protected Congress’s taxing power from unilateral executive expansion. The Liberty Justice Center is now defending that judgment on appeal and asking the Federal Circuit to ensure that the authority to tax the American people remains where the Constitution places it—with Congress.

For small businesses like Burlap & Barrel and Basic Fun, the stakes are immediate and practical: unlawful tariffs can disrupt supply chains, force price increases for American consumers, and threaten jobs and investment. But this case also has broader implications for the rule of law and the constitutional separation of powers that protects all Americans.

The case is brought on behalf of two American businesses directly harmed by the tariffs.

Burlap and Barrel, Inc. is a mission-driven spice importer that sources single-origin spices directly from smallholder farmers around the world. By working directly with farmers and importing high-quality spices into the United States, Burlap & Barrel supports sustainable agriculture abroad while bringing unique products to American consumers. Read more about Burlap & Barrel here.

Basic Fun, Inc. is a U.S. toy company that owns the rights to beloved classic brands including Care Bears, Lite-Brite, Tonka, and other iconic toys. The company relies on specialized global manufacturing to produce safe, high-quality toys at scale. The Section 122 tariffs imposed immediate and significant cost increases on products with long production lead times, forcing the company to choose between raising prices for American families or cutting jobs and investment in the United States. Read more about Basic Fun! here.

“The Supreme Court has already ruled that the President cannot unilaterally impose worldwide tariffs,” said Jeffrey Schwab, Director of Litigation at the Liberty Justice Center and lead attorney in Liberty Justice Center’s recent U.S. Supreme Court win in V.O.S. Selections, Inc. v. Trump. “Section 122 authorizes temporary tariffs for certain economic conditions that do not currently exist; it is not a general license for the President to tax the American people for reasons Congress never intended.”

The Court of International Trade’s decision confirms that principle.

Once again, the Liberty Justice Center is defending both small businesses and the constitutional separation of powers.

As demonstrated in the Liberty Justice Center’s landmark victory in V.O.S. Selections, Inc. v. Trump—which culminated in a 6–3 Supreme Court decision striking down the administration’s prior tariffs—no president has the authority to single-handedly impose taxes on the American people. That power belongs to Congress.

The Liberty Justice Center will continue fighting to ensure that presidents cannot transform narrow statutory authorities into sweeping powers to tax the American people. The Constitution gives that power to Congress, and the Supreme Court and the Court of International Trade have reaffirmed that principle in the IEEPA and Section 122 tariff challenges, respectively.

Although the Section 122 tariffs expired on July 24, 2026, the litigation will continue as the Liberty Justice Center seeks to defend the Court of International Trade’s ruling and preserve its clients’ right to complete relief, including refunds of tariffs unlawfully collected.