(Axios)—U.S. courts have the potential to be the biggest threat yet to the central tenet of President Trump’s economic agenda.
Why it matters: Legal groups representing Main Street businesses want judges to block some tariffs as lawsuits against the levies make their way through the judicial system.
State of play: Bigger names in corporate America are reluctant to take Trump on in court. A trade group representing major retailers has pulled back on a potential tariff lawsuit, Bloomberg reported this month. Its members were hesitant to proceed.
- Small businesses, however, are involved in multiple lawsuits seeking to block Trump’s tariffs. The legal groups that represent them admit it is impossible to know how — and how quickly — courts might respond.
- The latest lawsuit, filed by Liberty Justice Center on Monday on behalf of five small businesses, alleges Trump does not have the power to impose across-the-board worldwide tariffs without congressional approval.
Between the lines: The White House relied on untested emergency powers to impose tariffs, a move that at least three lawsuits now argue is executive overreach.
- Trump invoked authorities under the International Emergency Economic Powers Act (IEEPA), which gives the president wide-ranging powers in an emergency.
- Trump signed executive orders saying that illegal drugs, undocumented immigration and “large and persistent” trade deficits constituted national emergencies.
Yes, but: IEEPA has never been used to implement tariffs since its creation in 1977.
- “Even if you declare an emergency, it doesn’t let you tax the American people. It doesn’t let you impose a tariff,” says Andrew Morris of New Civil Liberties Alliance, which filed a lawsuit against the China tariffs on April 3 in a Florida district court on behalf of a local retailer.
The other side: White House spokesman Harrison Fields told Reuters, “Never Trumpers will always oppose him, but President Trump is standing up for Main Street by putting an end to our trading partners — especially China — exploiting the U.S.”
- While use of the emergency law to impose tariffs is unprecedented, courts have previously granted presidents other wide authorities under IEEPA.
What to watch: Liberty Justice Center tells Axios it is preparing to file for a preliminary tariff relief that, if granted, could result in suspended across-the-board tariffs.
- The risk is if a small business goes under before a judge rules on the tariffs that threaten the business.
- “In six months or a year from now, these businesses could look really different and monetary damages aren’t going to be able to make that up,” says Jeffrey Schwab, lead attorney on the case.
The bottom line: Tariffs are the latest policy under legal scrutiny, posing a test for how the administration handles potential fallout from the judicial branch.