(NEW YORK, N.Y.)—Today the U.S. Court of International Trade (CIT) ruled in favor of the plaintiffs in Burlap and Barrel, Inc. v. Trump, holding that the Trump administration’s tariffs imposed under Section 122 of the Trade Act of 1974 are unlawful. The Liberty Justice Center welcomes the court’s decision as a major victory for American businesses and consumers. A media roundtable will be held at 6:00 p.m. EDT via Zoom to discuss today’s decision. More details below.
The Liberty Justice Center filed the lawsuit on behalf of Burlap & Barrel, a New York-based online spice retailer, and Basic Fun!, a Florida-based toy company. The plaintiffs challenged President Trump’s February 2026 proclamation imposing a global import surcharge under Section 122—an attempt to revive a sweeping tariff regime after the Supreme Court rejected similar tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in V.O.S. Selections, Inc. v. Trump.
In its decision, the CIT held that Section 122 does not authorize the President to impose these tariffs under current economic conditions. The court recognized that Section 122 is a narrow, time-limited tool intended to address specific balance-of-payments crises—not a blank check for the executive branch to impose worldwide trade restrictions in response to ordinary trade deficits or to circumvent prior judicial rulings.
The Liberty Justice Center argued that although Section 122 does authorize the president to issue tariffs, that power is limited to when fundamental international payment problems result from a large and serious balance-of-payments deficit, which is not the same thing as a trade deficit that the administration used to justify its tariffs. Because the Constitution vests tariff authority in Congress, the President may only issue tariffs where Congress explicitly delegates that power. Section 122 does not allow the President to impose tariffs for any reason he wants.
“Section 122 was passed in response to a specific historical crisis that resulted in the United States’s currency and gold reserves being depleted. Congress authorized the President to impose tariffs where the United States experienced fundamental international payments problems and needed to respond to large and serious balance-of-payments deficits,” said Jeffrey Schwab, Senior Counsel and Director of Litigation at the Liberty Justice Center. “That is not the situation here. The United States has a trade deficit, not a balance-of-payments deficit, and does not have international payments problems. The President cannot impose these tariffs under Section 122.”
“This ruling is a major victory for small businesses like ours that depend on fair and predictable trade policy. These tariffs created real challenges for our company and for the farmers we partner with around the world,” said Ethan Frisch and Ori Zohar, co-founders and co-CEOs of Burlap & Barrel. “Today’s decision helps ensure that businesses like ours are not unfairly burdened by unlawful trade restrictions.”
“This decision is an important win for American companies that rely on global manufacturing to deliver safe and affordable products. Unlawful tariffs make it harder for businesses like ours to compete and grow,” said Jay Foreman, CEO of Basic Fun! “We are encouraged by the court’s recognition that these tariffs exceeded the President’s authority. This ruling brings needed clarity and stability for companies navigating global supply chains.”
The Liberty Justice Center will continue to defend businesses harmed by unlawful tariffs and government overreach, as it did in V.O.S. Selections, Inc. v. Trump. This ruling reinforces the principle that the President must act within the limits set by Congress and the Constitution.
The complaint and related filings in Burlap and Barrel, Inc. v. Trump are available here.
HOW TO PARTICIPATE IN MEDIA ROUNDTABLE:
Liberty Justice Center will host a media roundtable this afternoon at 6:00 p.m. EDT. Members of the press can register here.
ISSUE BACKGROUND:
On February 20, 2026, the Supreme Court held that the IEEPA does not authorize the President to impose tariffs in the landmark case V.O.S. Selections, Inc. v. Trump. Following this decision, the administration announced a new plan: a global tariff beginning at 10 percent imposed under Section 122 and justified as a response to alleged “fundamental international payments problems” and “large and serious United States balance‑of‑payments deficits.”
The Liberty Justice Center responded by filing Burlap and Barrel, Inc. v. Trump on March 9, 2026, which centers on the fundamental constitutional dispute regarding whether the President or Congress holds the authority to impose tariffs on the American people. The Liberty Justice Center is once again representing American businesses, like Burlap & Barrel and Basic Fun!, who shoulder the financial burden of this administration overstepping its executive boundaries by reinterpreting Section 122 of the Trade Act of 1974.
While this statute allows for temporary tariffs during genuine international financial emergencies, no such emergency exists and the administration is unlawfully using long-standing trade deficits as a pretext to bypass congressional approval and impose sweeping taxes on imports. Such an interpretation would dramatically expand presidential power, permitting future leaders to bypass democratic accountability by simply redefining ordinary economic conditions as a “crisis.”
For the American businesses, the stakes are both practical and existential, as these tariffs threaten to disrupt global supply chains, increase prices for American families, and jeopardize domestic jobs. The power to tax remains exclusively with Congress and the Liberty Justice Center will protect the constitutional separation of powers and the rule of law.
Basic Fun!, a U.S. toy company that owns the rights to brands including Care Bears, Tonka Trucks and Lincoln Logs, has explained that the tariffs have increased the cost of bringing those toys to market—placing pressure on American companies that rely on global manufacturing to produce safe, affordable toys.
The Liberty Justice Center is reviewing the court’s opinion and will announce its next steps soon, including an appeal and continued litigation as necessary.
The complaint and related filings in Burlap and Barrel, Inc. v. Trump are available here.