Trade Court Hears Challenge to Trump’s Tariffs

A group of small businesses challenged the president’s use of the International Emergency Economic Powers Act.

A Maersk container ship is docked at the Yantian International Container Terminal, with multiple gantry cranes positioned for cargo handling, in Shenzhen, China, on April 12, 2025. Cheng Xin/Getty Images

The U.S. Court of International Trade heard arguments on May 13 from the Trump administration and a group of small businesses, which alleged that the president’s tariffs were illegal and inflicted economic harm.

It’s unclear how the court will rule on the issue, which stems from President Donald Trump’s reciprocal tariffs and other levies seeking to address trade imbalances with foreign nations.

In April, Trump invoked the International Emergency Economic Powers Act, stating that recent and persistent trade deficits threatened national security.

That law says the president can do things like regulate imports during extraordinary circumstances, such as a national emergency.

During the argument on May 13, Justice Department attorney Eric Hamilton told a three-judge panel not only that the law allowed Trump to impose tariffs but that his decision to do so was not something courts could review.

Jeffrey Schwab, who argued for the businesses, alleged that Trump was engaging in an unprecedented expansion of executive authority.

Schwab added that the administration’s “position 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 judges asked about how far they should go in questioning Trump’s basis for invoking the law.

At one point, Judge Jane Restani pressed Schwab for a legal standard or basis for judging whether there actually was an emergency that allowed Trump to invoke the law.

She also asked Hamilton 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.

In announcing his global tariffs, Trump said on April 2 that “large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; inhibited our ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries.”

The small businesses have disputed that an actual emergency exists, noting that the United States has long held trade deficits with other nations.

They also denied that the law allowed the president to impose tariffs.

Judge Timothy Reif asked Schwab what Congress meant when it said the president could regulate imports.

“What would they have been thinking of other than tariffs?” Reif asked.

“Lots of things,” Schwab responded.

He added that “there could be increased inspections based on ... concerns about certain countries, or concerns about specific products.”

The hearing came amid news that the United States and China had agreed to slash tariffs on each other for 90 days.

Both countries had imposed tariffs of more than 100 percent.

According to Trade Representative Jamieson Greer, the United States’ reciprocal tariff on Chinese goods will fall by 115 percentage points to 30 percent.

China will cut its tariff rate by 115 percentage points, to 10 percent, for U.S. imports and also lift its other countermeasures.

It is unclear how the unfolding dispute between Trump and China will be resolved, but litigation could serve as a path for doing that.

The court is expected to hear another case on May 21 involving multiple states’ accusations that Trump “upended the constitutional order” with his tariffs. The states said that Congress, not the president, is given power under the Constitution to impose tariffs.

The administration has argued, however, that Congress used the International Emergency Economic Powers Act to delegate that authority to the president.